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VPN restrictions in China spook international businesses

News, 01 August 2017
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HONG KONG: Amid news that Apple has removed popular VPN (Virtual Private Network) software from its app store in China, multinational companies are beginning to doubt the country’s recent pro-business rhetoric.

VPN Companies, which are used by to get past the country’s “Great Firewall” have been shut down in recent weeks. The New York Times reported that companies, including ExpressVPN had received letters from Apple informing them that they no longer complied with the country’s laws.

“We’re disappointed in this development,” the company wrote on its website, “as it represents the most drastic measure the Chinese government has taken to block the use of VPNs to date, and we are troubled to see Apple aiding China’s censorship efforts.” The blog went on to condemn a move that it called a threat to free speech and civil liberties.

For foreign companies operating in China, the development represents a serious threat to the day-to-day running of business, especially as many use VPNs to connect to Google email addresses, the FT reported.

“The environment is changing weekly at the moment,” Carolyn Bigg, a senior lawyer at DLA Piper in Hong Kong, told the paper. She added that businesses could no longer ignore these restrictions.

Reporting the implementation of the law in May, the same paper reported comments from risk-management consultant Carly Ramsey, who noted the law’s vagueness and extremely broad scope. The law was proposed to protect Chinese data from foreign governments.

Michael Chang, VP of the European Chamber of Commerce in Beijing, urged Beijing to make the measures “proportionate, consistent, non-discriminatory, and formulated in a transparent manner.” 

Meanwhile, Quartz reported that the same day the VPNs were taken down –29th July– the Russian government passed a similar law prohibiting all VPNs and other proxy services.

For business, these regulatory developments have created deep uncertainty for many internet companies, whose business relies on cross-border communication. “Innovation,” said William Zarit, chair of the American Chamber of Commerce in China, is “critical to China’s economic development as well as the success of US companies in China.” Open communication, he said, was key to innovation.

Data sourced from the Financial Times, New York Times, ExpressVPN, Quartz; additional content by WARC staff

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