Lord Mandelson spoke out during his five day visit to Beijing where he is attempting to boost UK-China trade links. "We have got a lot out of China in fulfilment of WTO obligations. In the main they have followed them to the letter. But in other cases, I don't think they are keeping to the spirit of their commitments," Mandelson said. "While tariffs have been reduced or have disappeared, more invisible barriers and restrictions and regulatory inhibitions to trade and investment have grown up."
It wasn't made obvious what the business secretary meant by 'invisible barriers and restrictions', but it appears clear to some degree that China's Internet restrictions are affecting western companies, both in the way they carry out business and in the way they promote themselves.
It is a myth to say that Internet restrictions do not affect business. The 20th century benchmarks for international trade were how many containers or freighters were sent across the water from one nation to another. In the 21st century, it is as much more about data, viewers and users. The few big sites that have been blocked and restricted in China are powering thousands of small businesses and driving the future of online commerce. China has become a dead-zone for any business planning on building an international online presence. Twitter for example, though a haven for the likes of Stephen Fry and other celebrities, is also a powerful business tool.
Sites like Youtube, Facebook and Twitter aren't just used for social networking ; increasingly, they are being used by small and medium enterprises as platforms for marketing and communication, and even multinationals have woken up to the potential of these platforms. Some of them have begun to use Twitter, for instance, as a frontline interface with customers to redress their grievances. In a recent poll on a popular media website in China, 84 per cent of those who responded said China's Internet blocks made their work more difficult; 90 per cent said it made their personal life and entertainment access more difficult. And strikingly, about 60 per cent said they would consider leaving China because of the Internet blocks.
Admittedly the sample size was small, a little over 150, and it may have been weighted in favour of heavy Internet users. The respondents primarily came as a result of a Twitter feed put out by the media site Danwei themselves, and a technology blogger in China known as Flypig. Given that both Twitter and Danwei's site is blocked within China, the fact anyone replied to the poll at all is an achievement in itself. It also illustrates how difficult it is to promote an idea or message under such restrictions. A business idea would have failed just as badly.
One businessman working in China as a safety consultant told tvnewswatch that videos posted on his website showing the achievements the company had made in mine safety could not be seen in China since they were hosted by YouTube, which is blocked. The argument might be to use a Chinese equivalent site which isn't blocked. However many westerners are both unfamiliar with those sites or of the language in which they are displayed.
While some of these blocks may be temporary, the uncertainty over when the services will return and if they'll be blocked again is not acceptable to business. YouTube has been blocked since March 2009, and Facebook & Twitter have been down for over two months. In the 24-7 world of online commerce, that level of service interruption is total. YouTube may come back someday, but no IT or Marketing department will ever again be able to rely on the platform in China. The same goes for Twitter and Facebook. Even Google has been restricted and blocked to the point where it is not a 100% reliable business tool within China. For business owners the bad news is already in the market and they are responsible for finding a way around it.
The frustration is heightened by the realisation that traditional methods of using technology to get around the Great Firewall of China are being hampered. Virtual private networks, or VPNs, are increasingly being blocked and proxies are also unreliable. While some enable access to sites blocked by the firewall, sites requiring user identification is impossible due to security issues.
This hurts China at several levels, and reflects poorly upon it. With its crude censorship of the Internet, China is in effect choking the flow of ideas. By drawing up its moat and cutting itself off from the online world, China is showing itself up to be a paranoid power that lacks the self-confidence to deal with the free flow of information -- to the point where it is beginning to neutralise, slowly but steadily, its other advantages as a place that's open for business.
Mandelson, a former EU trade commissioner, said that while Europe had gained though its trading with China, the benefits were dwindling. "I have no doubt we have gained. But I have previously estimated that these barriers were costing us [Europe] something in the region of €20bn [£17.5bn] worth of trade – and I think if anything that is growing," he said in Beijing this week. He said that while it was in everyone's interests for China to continue growing, "We need a constant dialogue with the government to exert quite legitimate pressure; when we are open to China's goods and services, it must become progressively and more speedily open to ours."
There are of course other more fundamental issues at stake beyond the use of the Internet. EU's recently imposed tariffs on steel pipe imports and the United States' consideration of restrictions on Chinese-made tyres concern China greatly. But China too has suggested moves that would hit the west extremely hard. Recently China talked of restricting the export of rare earths that are widely used in developing technologies and the electronics industry. This has concerned many who believe that China is setting out to monopolise certain manufacturing sectors.
There also remains unsolved issues of so-called bribery allegations connected with the arrest of several Rio Tinto staff. The issues are relatively complex but some have accused China of not playing on a level playing field when it comes to domestic and foreign negotiations.
As Mandelson continued his tour of the Chinese capital he met with Premier Wen Jiabao. But while Xinhua, the state run news agency, reported on the business secretary's visit, there was no mention at all of his concerns. Running under the headline "Premier says China's market economy status good for boosting trade with EU", Xinhua quoted Wen as saying the "vitality of the China-Britain all-round strategic partnership" was important. Mandelson's comments were edited down to one line; "We need to develop a clearer and consistent channel for communicating with China, especially on trade and climate change issues."
There is, it appears no free market, no free press, no free flow of information and no level playing field when it comes to doing business in or with China. Anyone who says otherwise is probably hoodwinking themselves.
tvnewswatch, Beijing, China
Sites like Youtube, Facebook and Twitter aren't just used for social networking ; increasingly, they are being used by small and medium enterprises as platforms for marketing and communication, and even multinationals have woken up to the potential of these platforms. Some of them have begun to use Twitter, for instance, as a frontline interface with customers to redress their grievances. In a recent poll on a popular media website in China, 84 per cent of those who responded said China's Internet blocks made their work more difficult; 90 per cent said it made their personal life and entertainment access more difficult. And strikingly, about 60 per cent said they would consider leaving China because of the Internet blocks.
Admittedly the sample size was small, a little over 150, and it may have been weighted in favour of heavy Internet users. The respondents primarily came as a result of a Twitter feed put out by the media site Danwei themselves, and a technology blogger in China known as Flypig. Given that both Twitter and Danwei's site is blocked within China, the fact anyone replied to the poll at all is an achievement in itself. It also illustrates how difficult it is to promote an idea or message under such restrictions. A business idea would have failed just as badly.
One businessman working in China as a safety consultant told tvnewswatch that videos posted on his website showing the achievements the company had made in mine safety could not be seen in China since they were hosted by YouTube, which is blocked. The argument might be to use a Chinese equivalent site which isn't blocked. However many westerners are both unfamiliar with those sites or of the language in which they are displayed.
While some of these blocks may be temporary, the uncertainty over when the services will return and if they'll be blocked again is not acceptable to business. YouTube has been blocked since March 2009, and Facebook & Twitter have been down for over two months. In the 24-7 world of online commerce, that level of service interruption is total. YouTube may come back someday, but no IT or Marketing department will ever again be able to rely on the platform in China. The same goes for Twitter and Facebook. Even Google has been restricted and blocked to the point where it is not a 100% reliable business tool within China. For business owners the bad news is already in the market and they are responsible for finding a way around it.
The frustration is heightened by the realisation that traditional methods of using technology to get around the Great Firewall of China are being hampered. Virtual private networks, or VPNs, are increasingly being blocked and proxies are also unreliable. While some enable access to sites blocked by the firewall, sites requiring user identification is impossible due to security issues.
This hurts China at several levels, and reflects poorly upon it. With its crude censorship of the Internet, China is in effect choking the flow of ideas. By drawing up its moat and cutting itself off from the online world, China is showing itself up to be a paranoid power that lacks the self-confidence to deal with the free flow of information -- to the point where it is beginning to neutralise, slowly but steadily, its other advantages as a place that's open for business.
Mandelson, a former EU trade commissioner, said that while Europe had gained though its trading with China, the benefits were dwindling. "I have no doubt we have gained. But I have previously estimated that these barriers were costing us [Europe] something in the region of €20bn [£17.5bn] worth of trade – and I think if anything that is growing," he said in Beijing this week. He said that while it was in everyone's interests for China to continue growing, "We need a constant dialogue with the government to exert quite legitimate pressure; when we are open to China's goods and services, it must become progressively and more speedily open to ours."
There are of course other more fundamental issues at stake beyond the use of the Internet. EU's recently imposed tariffs on steel pipe imports and the United States' consideration of restrictions on Chinese-made tyres concern China greatly. But China too has suggested moves that would hit the west extremely hard. Recently China talked of restricting the export of rare earths that are widely used in developing technologies and the electronics industry. This has concerned many who believe that China is setting out to monopolise certain manufacturing sectors.
There also remains unsolved issues of so-called bribery allegations connected with the arrest of several Rio Tinto staff. The issues are relatively complex but some have accused China of not playing on a level playing field when it comes to domestic and foreign negotiations.
As Mandelson continued his tour of the Chinese capital he met with Premier Wen Jiabao. But while Xinhua, the state run news agency, reported on the business secretary's visit, there was no mention at all of his concerns. Running under the headline "Premier says China's market economy status good for boosting trade with EU", Xinhua quoted Wen as saying the "vitality of the China-Britain all-round strategic partnership" was important. Mandelson's comments were edited down to one line; "We need to develop a clearer and consistent channel for communicating with China, especially on trade and climate change issues."
There is, it appears no free market, no free press, no free flow of information and no level playing field when it comes to doing business in or with China. Anyone who says otherwise is probably hoodwinking themselves.
tvnewswatch, Beijing, China
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