China Trading Desk
China Tech Crackdown – October update
We continue our coverage on the great tech crackdown in China. If you have missed our previous coverage, read more about the Anti-monopoly crackdown, PIPL, Advertising law updates.
Chinese authorities say progress is being made in their efforts to clean up the irregularities created by privately run tech giants and that “there will be more substantial progress by the end of this year”. Many point to this as a sign that the crackdown might end soon. But on the other hand, the head of China’s Ministry of Industry and Information Technology (MIIT) said scrutiny of the internet sector will deepen, the agency only halfway through its six-month campaign to fix problems with the digital economy.
We round up some of the key developments over the past month.
LinkedIn Linking Out –
One of the biggest news for western companies is the news that LinkedIn is shutting down its social network in China. This is to comply with the latest internet laws, censorship and increasing challenges in operating environment and greater compliance requirements. LinkedIn was the last major U.S social network still operating in China – Google, Facebook, Twitter all have been blocked for more than a decade.
While LinkedIn is not completely shutting down in China – it will operate a job portal – this will be a shell of its formal self with no functionality to comment, post or share information.
If you are an advertiser previously running ads on LinkedIn China, your options now are limited to MaiMai – a Chinese version of LinkedIn.
Walled gardens – no more?
MIIT has been giving guidance to internet companies as they conduct self-rectification measures to unblock external website links. China’s internet industry has historically been characterised by “walled gardens”, where major companies built barriers around their ecosystems, blocking links to the services of rivals. Tencent’s WeChat has in the past banned some external links to competitors including e-commerce giants Alibaba and ByteDance. ByteDance, for example, blocks links to WeChat as well as the live-streaming channels of JD.com.
After the MIIT ordered “self rectification” measures to unblock external links, Tencent said it supported the decision and would “make the necessary changes in phases”. Alibaba said it will “fully comply” with the new mandate, and ByteDance said it will not delay implementation.
Cracks have started to appear –
WeChat started to allow links to its rivals to be shared in one-to-one chats
Alibaba plans to launch bargain online shopping platform Taobao Deals as a mini-program on WeChat – although it has hit a snag after WeChat suspended the trials, they are working towards a resolution.
Alipay, WeChat Pay open up payments ecosystems to UnionPay
Ban on cross-border transfer of data –
MIIT has drawn up new regulations that will prevent industrial & telecommunications data from leaving the country. The public can provide feedback on the draft by end of October.
All businesses that handle industrial and telecoms data in China are required to categorise such information into “ordinary”, “important” and “core”, and report their data catalogue to the MIIT’s local branches.
As with many laws, the categories are subjective and undefined yet.
Approved news outlets & ban on private capital in news media –
China’s internet watchdog has published a new list of government-approved news outlets, giving the nation’s internet platforms an exhaustive directory of sources they are allowed to republish. The list is nearly 4 times longer than the previously published version (2016), consists of 1,358 sources.
In related news, China has reiterated its ban on Private enterprise in news organizations. The document specifies that non-public capital, generally considered capital unrelated to the government or state-owned companies, “shall not invest in, set up or operate news agencies, newspapers, publishers, or radio or television stations”. While the original ban has been in place since 2005, it has been selectively enforced.
The document specifies that private capital cannot be used for live broadcasting of key events, including content related to politics, economics, the military, diplomacy and culture, along with any other events that can affect public opinions. The same rule applies to running certain pages, channels, columns, programmes, or social media accounts of accredited news organisations.
Fines & ban on controversial ads –
Two of China’s largest short video-sharing apps – Douyin & Kuaishou have been fined 200,000 Yuan by regulators for publishing controversial mico loan ads that encouraged “excessive consumption”. Regulators described the behaviour of the two app operators as having “serious value problems that preached incorrect orientation, such as excessive consumption”. This reflects Beijing’s effort to strengthen governance of the country’s cyberspace, bringing ideology, culture, moral standards and online behaviour under control.
Still confused? Too many laws & regulations to follow & keep track of? Do not fret, we are here to help. We keep track & ensure all our client's digital campaigns are compliant in China. Get in touch if you need assistance.