China: Addressing the firewalls to your business – part 1

China’s economy has witnessed one of the most remarkable growths in the last 30 years. It has been regarded as one of the world’s largest economies and a major engine for global growth. In 2017 alone, China produced $23.1 trillion in economic output according to World Factbook.

At the World Economic Forum this year, Chinese President Xi Jinping’s top economic adviser, Vice Premier Liu He spoke about China’s intention to create opportunities for foreign companies under an economic model based on quality rather than breakneck growth, along with creating new measures to open up its markets this year. This has no doubt been very encouraging and great news for anyone looking to leverage the market potential of China.

However, for companies to make the most of what the market has to offer, it’s imperative to understand China’s government policies and regulations.

As its economy grows, so does the wide net of policies the country casts on each industry, defining standards and regulations for both domestic and foreign organisations to follow.

These regulations can have a direct impact on a business’ decision to enter the market, often defining time to market and entry costs. Hence, it is critical that businesses are aware how best to address these regulations which could be perceived as limitations or blocks.

Take for example, ‘The Great Firewall of China’, which refers to the censorship and surveillance of internet usage in China. To have any sort of digital presence in the country, one must be aware of the regulations and solutions to conduct their business direct or through partners in the region.

Beyond the firewall

The latest news on the blogosphere is that China is beefing up its firewalls to stop internet users in the country and outside being able to use any Virtual Private Networks (VPNs). In the past, citizens have used VPNs to steer their way around the Great Firewall, but China will soon be cracking down on these networks.

This could be bad news for companies that rely on VPNs to do business in China. Global businesses in China tend to use VPNs to secure their company data or communicate with company headquarters. Enterprises that use Software Defined –Wide Area Network (SDWAN) might also be worried, as they could see a similar slowing down of services.

There’s a lot at stake, when you consider that China is aiming for a GDP growth of 6.5% this year, while analyst firms have forecast IPVPN revenue at around US$2.5bn.

In part two of this blog I will not only be looking at how businesses can deal with this policy change, but also use it as an opportunity.

Read about the recent security health check undertaken in Singapore here.