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2015-02-12 | All chapters

Internet Restrictions Increasingly Harmful to Business, say European Companies in China

Beijing, 12th of February 2015 – China’s recent slew of measures to further restrict domestic Internet access is isolating it from the rest of the world and could turn its domestic networks from an internet into an intranet. This would be highly detrimental to business operations in China. All businesses—both foreign and Chinese—are affected by what, in effect, constitutes a corporate ‘Internet tax’.

A member survey conducted by the European Chamber of Commerce over the last few weeks revealed that:

•     86% of respondents reported a negative effect on their business as a result of certain websites and online tools being blocked, a 15% increase compared to June 2014.

•     80% of respondents have recorded a worsening business impact as a result of the recent further tightening of Internet controls beginning in early 2015. 

•     13% of respondents have recently deferred R&D investment or have become unwilling to set up R&D operations in China since Internet restrictions were tightened in early 2015. 

European Chamber President Jörg Wuttke stated, “These worrying trends illustrate how excessive tightening of Internet controls can choke business growth and stifle investment in technology and R&D – areas which are crucial for China’s development. This is compounded by the fact that these measures are also discouraging much-needed foreign talent from relocating here. Restricted access to key Internet tools is not merely an unfortunate inconvenience for individuals – it is an increasingly onerous cost of doing business here that many companies are finding harder to bear.”

President Wuttke continued, “It’s obvious that information-based, global-facing businesses will fuel China’s growth in the years ahead, and it is in China’s own interests to ensure that Internet supervision does not hamper legitimate, value-added commercial activity. Remember, this is not just a problem for international business – we know from extensive conversations with the Chinese public and the private sector that many domestic companies are just as frustrated as our members.”

The European Chamber has consistently supported the Chinese Government in encouraging European businesses to commit more of their R&D capabilities to China, to set up regional headquarters here and increase their already robust investment in this promising market. It is therefore hugely dispiriting to see numerous member companies actively scaling back investment and expansion, and diverting their spending to other markets. The consequences of excessive Internet control are unnecessary and avoidable, and if left unaddressed will only get worse as more business activity moves online.

 

About the European Union Chamber of Commerce in China

The European Union Chamber of Commerce in China was originally founded by 51 member companies based in China on 19th October 2000. It now has approximately 1,800 member companies throughout China across nine offices in seven chapters. The rationale for the establishment of the European Chamber was based on the need of the European Union and European businesses in China to find a common voice within various business sectors. The European Chamber is recognised by the European Commission and the Chinese authorities as the official voice of European Business in China, and seeks greater market access and improved operating conditions for European companies.

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Yichi Zhang

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