Chinese Cyberlaws and the Business Conundrum

Few days back, I was invited by IIM B to judge a case study contest (part of Vista) – the case study was based on Chinese cyber laws (or rather, dictatorial policy?).

Here is an excerpt from the case study(download the pdf) :

“Cyber censorship is nothing new in China. For more than a year, Internet cafes across the country have been forced to keep records of all users for a 90-day period and install their own in-house filters.

..For companies like Cisco Systems and Microsoft, the question has great political implications- whether or not to continue selling hardware or software that filters communications or facilitates their monitoring to a government that is likely to use it for both purposes.
For Yahoo and Google, among others, it gets even more complex.
It is whether to: (1) comply with Chinese requirements that they make available information regarding individuals using their Internet sites that could endanger users’ welfare, (2) resist such license requirements, or (3) cease doing business in China. The increased complexity arises from the fact that Yahoo, Google, and others are not simply manufacturing and selling. They are utilities that handle sometimes sensitive information on a worldwide basis.

Proposition 1: Shut down services and leave the world’s second biggest consumer
market.
Proposition 2: Continue to stay and comply with the license regime as the
management’s first obligation is to its shareholders, not others with political agendas.”

chinese firewall
chinese firewall

Essentially, Proposition 1 means you lose out on the Chinese market and let it go – Can you really afford to turn you back on one of the largest economy of the world? To share some perspective, Baidu’s growth (from 2002-2005) is attributed to the fact that Google/Yahoo were struggling with the great Chinese firewall.

While Proposition 2 means you compromise on your principles, on the basic core of your company. For instance,

What will you do? Take the middle ground?

We felt that perhaps we could compromise our principles but provide ultimately more information for the Chinese and be a more effective service and perhaps make more of a difference – Sergey Brin.

Essentially, the question comes back to one single point – What is more important? Business or Core values?

If you have a global product, you will need to take some decision sooner or later (for e.g. TringMe was blocked in China).

And mind you, these are your testing times – what’er you decide, you will have to live with it forever.

What will be your stance? Do share.

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