How will China's foreign content crackdown play out?

BEIJING - China's new rules restricting foreign companies and their joint ventures from publishing anything online without approval will apply from 10 March onwards. Industry insiders said they are studying the rules, but remain unfazed for now as the key question is how the rules will be enforced.

How will China's foreign content crackdown play out?

China has taken what looks like a drastic step in its aims to restrict foreign companies disseminating information online.

The rules, released by the Ministry of Industry & Information Technology and the State Administration of Press, Publication, Radio, Film and Television (click for Chinese source), say that from 10 March, foreign companies and Sino-foreign joint ventures will be restricted from publishing online content without government approval.

Content includes "texts (including digitally distributed books), video, pictures (including cartoons), music, maps, animations or games", according to the new rules.

Foreign companies working in conjunction with Chinese firms will be able to publish such content, but they will need government approval first.

Anything that is published must comply with a series of opaque rules, including not "harming national unity", nor "harming national honour and interests" or "endangering social morality".

Such a sweeping law against foreign companies could affect global media outlets and other online content distributors. App developers and tech brands, such as Apple’s China App Store, could run into problems as well.

To put things in context, content and publishing has always been a highly regulated area in China and has never been "opened" to foreign companies, pointed out Lu Jin (卢劲), senior public affairs advisor with Fortune China Public Relations. 

Jonathan Hughes, president, International at Golin, agreed. "From a practical perspective it doesn’t appear to be that much different," he said. "There’s always been a high level of regulation of these kinds of content. What’s new, I guess, is that they are codifying what’s been common practice and turning it into law.

"Brands know they have to produce content that’s within certain social norms and restrictions within China. They already know what they can and can’t do in terms of content."

The language of the rules is somewhat vague regarding which types of foreign companies will be affected.

Several foreign media outlets, such as Bloomberg, The New York Times and others, already have their sites blocked in China. Multinationals like Google, Facebook and Twitter have also been banned for many years.

The new rules say content published online in China must be hosted on servers in China, something that few foreign media companies do. How companies who host their content outside China will be affected is unclear.

Paul Haswell, a partner at law firm Pinsent Masons in Hong Kong who specialises in technology and data protection, said enforcing the new rules seems tricky on the face of it, and that many Chinese consumers use VPNs to access restricted sites as it is.

"It’s hard to see how these new rules will really change the status quo," he said. "However, if the rules go further, seeking to prevent overseas firms from having any online content in China at all, even a corporate website hosted outside of China, then they will be near-impossible to enforce but at the same time send a message that foreign business is no longer welcome. It would be unusual, even in a climate where controls on information are tightening, for such a restrictive step to be taken."

Brittany Li (李伊雯), vice president of business development at Chinese content-marketing agency FansTang, said that the firm’s foreign media partners have always known about restrictions on foreign content, and that the new rules might lead to specific, practical changes but not large-scale ones.

"They understand deep down inside that foreign content has been historically repressed, whereas locally produced programs are heavily promoted, so they have been frustrated due to it," Li said. "When it comes to overall content strategy, I don’t think there will be a big effect," she added. "The pushback from the Chinese government is a great opportunity for smaller content agencies or production houses like us, as we specialise in co-producing content through partnerships with Chinese video portals or licensing foreign content, like the Golden Globe Awards to Hunan TV for example."

This rule will apply more to bigger studios like Disney and Warner Brothers and encourage them to produce more China-related co-productions to be imported back into the Chinese market, Li said.

From a macroeconomic standpoint, Saurabh Sharma, a China observer who prefers not to name his agency as he was sharing his own opinion, said a relatively less obvious and more speculative reason is "regulators are seeking something from foreign media and this regulation could help create a bargaining chip for them".

"The fierceness with which Chinese regulators will apply this will be conditioned by the quality of behaviour of foreign media," said Sharma. "The more compliant they would be, the less regulated they could be." 

The bad news is China is limiting itself from joining the rest of the world, said Miranda Tan (谭雁文), CEO of Robin8. "However since China is a superpower, you have to play by their rules, or don't play."


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