The National Basketball Association (NBA) was in the spotlight in October of 2019 due to steps taken against associates who have spoken out on social media about the situation in Hong Kong. There have been many recent cases of companies retracting statements and suspending or firing the people who speak out in similar ways, so that such companies can maintain their ability to do business in China. The Chinese Government’s system of internet regulations and technologies is called the Great Firewall of China. China’s policies regarding domestic internet regulation has allowed China to shape the face of Global Tech by challenging outside tech companies with dilemmas on policy and creating an environment for new Chinese based tech giants to flourish.

Why are companies struggling to address these policies? Many of China’s internet regulations are not unique. Most countries have some form of internet protections and several censor specific things, such as in Germany where Twitter must censor Holocaust denial and hate speech. These types of regulations have been increasing over the past decade with one of the latest being Singapore’s Protection from Online Falsehoods and Manipulation Act. Some of China’s requirements are specific, dictating that companies must list Taiwan, Hong Kong, and Macau as part of China when using them as locations on their websites; however, this already provides a question for companies based in countries that explicitly see these regions as separate and or independent. When regulating more divisive issues such as certain news, images, or references to historical events, following the law becomes more challenging.

The main problem companies faced when trying to do business with China, is balancing the needs of different countries. As more companies prioritize global expansion, they must abide by Chinese laws to continue operating in the expanding Chinese market. At the same time, however, companies outside of China must balance the sentiments and preferences of their home country consumer base. A Peking and Harvard University study showed that Chinese students receiving unregulated access to the internet have little interest in currently banned content, they simply want the best service, therefore compliance does not minimize a company’s appeal in China. However, when tech platforms censor content, they can face major pushback from foreign consumers and legislators. While many countries have been expanding regulations against hate speech and fake news, democratic governments are reluctant to directly regulate against Chinese mandated censorship because it expands the standard that setting content standards for private companies is acceptable and it uses private companies to enact foreign policy. This reluctance has allowed China to influence what Global Tech looks like.

It is also important to consider how Chinese technological regulations have helped create a protected environment, where domestic Chinese companies to grow into tech giants. Companies like Tencent, Weibo, and Alibaba, may not have been able to succeed without the blockage of Google, Facebook, and other tech companies that were already dominating the space. These massive companies have now begun to shape their counterparts outside of China. Tik Tok is a massively popular across the world short-form video social media app. It is owned by a Beijing based tech company and is now under National Security review by the U.S. government due to accusations of censoring content in the U.S. following Chinese policy. Still the app continues to have a massive following, especially from young people. Tencent, a giant Chinese corporation that specializes in internet-related services, products, and entertainment, has been under scrutiny as a possible influence for the NBAs actions due to its recent deal to stream NBA games in China.

The rapid growth of these companies also demonstrates the power of the Chinese market for tech industries. Alibaba’s Singles Day 2019, an annual e-commerce shopping event similar to Black Friday, broke its own record with $38 billion in sales in 24 hours, largely from a Chinese market that has money to spend. For this reason, many have chosen to directly cooperate and abide by Chinese policy either by creating separate products for China or making their platform comply universally. Two of the biggest global tech companies, Apple and Microsoft, censor some information as a condition to operate in the country. Although policy chiefs reassure consumers that having a presence in China promotes greater openness and allows a free flow of ideas, many consumers and politicians have been skeptical of this practice.

Another reason many companies struggle is that they have built monopolies into their platforms. For instance, because the Apple controlled App Store is the only way to download applications, they are forced into acting as the checkpoint for governments. When governments do not want a specific app to be available, Apple is the one that has to take action, which can cause backlash. One alternative way to comply with the proposed policies is by reducing monopolies. By putting power back in users’ hands, the job of regulating could be passed to the Great Chinese Fire Wall’s domestic systems. If Apple were to decentralize and allow for user controlled downloading off websites or allow local, competitive versions of the App store, governments could regulate directly through internet compliance services.

China’s growth has made its market essential for future tech expansion. Ignoring such opportunity is not an option. Whether it be with companies in the U.S., Japan, Europe, or developing regions involved with China through its global expansion effort called the Belt and Road Initiative, China will continue to expand and continue shunning uncooperative firms and governments.

Ashley Fernandezis a sophomore in the Wharton School studying Management and Legal Studies, with a minor in Chinese EALC. Her interests include international business and international affairs. Ashley is also a Civic Scholar working in Environmental and Educational Justice. She will be the Managing Editor for IBR Online starting next semester.

Sources:

https://www.vox.com/2019/10/7/20902700/daryl-morey-tweet-china-nba-hong-kong

https://www.theguardian.com/news/2018/jun/29/the-great-firewall-of-china-xi-jinpings-internet-shutdown

https://www.economist.com/international/2019/11/07/countries-are-increasingly-willing-to-censor-speech-online

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