China VPN ban hitting international businesses hard

China’s crackdown on internet freedoms, and particularly VPNs, is beginning to have a major impact on foreign businesses operating in the authoritarian state.

As access to VPNs becomes increasingly difficult, ahead of the outright ban which comes into force in February next year, overseas companies are increasingly faced with a stark choice – accepting the surveillance and censorship regime of the Chinese Communist Party or withdrawing from the market altogether.

VPN access in China getting harder

A recent article in the Nikkei Asian Review has highlighted the extent of the problem. As they explain, many foreign companies in China have relied on VPN services to communicate with the free world outside China as well as with their own offices around the world.

But for the past year, accessing these services has become increasingly difficult. Chinese-made smartphones are now unable to support most VPN services, while Apple has recently come under fire for removing 674 VPN apps from their China app store. They argued that this would somehow help Chinese freedom of speech.

The regime in China has claimed that foreign businesses will be exempted from their VPN ban, but in recent months it has become apparent that this is not the case.

The Nikkei Asian Review reports on an electronics parts maker in Beijing blocked from a server in Japan, denying it access to customer data, a food maker in Shanghai unable to access its company’s intranet and an auto-parts maker in Hubei Province who discovered some emails were no longer reaching some clients.

An official from Startia Shanghai, which provides telecoms services for Japanese companies was quoted as saying, “We’ve been seeing a surge in the number of inquiries from our Japanese corporate clients about communication troubles since September… We can’t advertise anymore because we can’t handle more customers.”

The cause of the problem is clear

One of Japan’s biggest telecoms companies is in no doubt about the cause of the problem. “Chinese authorities are disabling VPNs, which is causing the latest rash of troubles,” he said, before going on to explain that the Chinese regime planned to “eradicate them [all] by the first half of next year.”

It is not just online communications which have been affected. In September, access to Yahoo was blocked, making it almost impossible to search the internet on a regular search engine.

One employee of a Japanese company in Guangdong said “We cannot do internet searches at all. We telephone colleagues in Japan and ask them to search for us. They send us information by mail.”

The encrypted online message service WhatsApp was also blocked, while users of e-commerce sites have also been targeted.

The question many are asking is why China is taking these steps now. It was thought by some commentators that the moves might be temporary ahead of the Communist Party’s flagship ‘People’s Congress’ meeting in November.

But there has been no sign of a let up since that meeting concluded. In fact, the situation continues to deteriorate.

Does the Chinese Communist Party want to completely cut all communications between China and the outside world? Is it about trade protectionism? Such a stance doesn’t seem to fit with the regime’s aggressive and expansionist international trade and economic stance.

All about control

More likely it is about control. If VPNs are not accessible, the only option left for international businesses is to install a secure dedicated line. These do not come cheap and are beyond the financial reach of small companies.

For big companies, the dilemma comes with the potential security risks associated with using such a line. To get one installed, companies have to turn to telecoms companies like China Telecom and China Unicom, which are controlled by the Chinese state.

Even International companies offering such services have to work in cooperation with state-run Chinese companies to install them. And either way, there are serious and well-founded concerns that data sent down such could be intercepted and stolen. China has a long track record of stealing corporate information and secrets.

VPNs are much more secure and trustworthy, but the problem is how long they will be available. For now, there are still a number of VPN providers which are still accessible behind the Great Firewall. And the big providers will all be working hard to keep their service accessible regardless of what efforts the Chinese regime make to block them.

But there are no long-term guarantees at this stage. And for businesses that do not want the Chinese regime to be listening in on their communications or accessing their corporate secrets, the only real way to protect them is not to do business in Communist China.

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