China crackdown creates problems for US businesses



As China ramps up regulatory crackdown and targets large corporations, senior executives face a difficult choice when it comes to doing business in the country: stay and tighten security, or leave.

R “Ray” Wang, founder and senior analyst at Constellation Research, said China is a major concern for the C suite as strategic planning for 2022 begins. Companies with operations in China will have to decide whether to stay, he said. If companies continue to do business in China, Wang said the focus should be on Data protection and IP, by strengthening privacy controls, establishing an exit plan for employees working in the country and preparing for risks such as more regulatory action.

I think the biggest risk right now is that you don’t know what to expect from the government.

R ‘Ray’ WangFounder and Principal Analyst, Constellation Research

“I think the biggest risk right now is that you don’t know what to expect from the government,” Wang said.

Chinese crackdown could affect US businesses

Recently, the Chinese government launched investigations into national companies such as the ride-hailing company Didi for suspected national security concerns shortly after the company was listed on the New York Stock Exchange. He also investigated e-commerce giant Alibaba regarding monopoly issues.

Experts like Wang fear China’s anti-business move may serve as a warning.

“The whole notion of Marxism is back,” Wang said. “So you need to be prepared for these regulatory risks that exist, and you also need to be prepared for the fact that the Chinese government may ask you to do something that might not be in the best interests of your government or your headquarters. “

Indeed, the US-China Economic and Security Review Commission held a audience To discuss emerging risks in US-China relations in 2021 on Wednesday, experts speaking at the hearing said companies should take into consideration.

Rebecca Fair, CEO and co-founder of Thresher, said the Chinese government is manipulating the landscape for companies operating in China and the United States, citing Didi, said the Chinese government has launched an investigation into the company within a few days after raising $ 4.4 billion in its US IPO and flooding social media with propaganda about the investigation, allowing disinformation about Didi to spread. Thresher is a Washington-based data analytics company that analyzes Chinese content.

“This disinformation claimed that in order to list on the New York Stock Exchange, Didi had agreed to give the US government access to its users’ data,” Fair said. “Didi’s management tried to publicly deny this misinformation, but the Chinese censored online content that spoke of Didi’s denial. In this example, we see the winning trifecta of the Chinese government’s manipulation toolkit: propaganda, disinformation, and censorship. “

Fair said these techniques allow the government to control actors in its economy, a “key part of its strategy to control the economy as a whole.” The vetting techniques can be used not only against Chinese companies, but also against US companies, Fair said.

Also this week

  • U.S. District Judge Yvonne Gonzalez Rogers has delivered a long-awaited verdict in the lawsuit between Apple and Epic Games. The verdict prevents Apple from banning app developers from including links in their apps that trick customers into making purchases outside of the app. Both Apple and Google have faced scrutiny of requiring app developers to use companies’ respective payment mechanisms for in-app purchases, and then charge high commissions on those purchases. Apple and Google have already taken steps to appease developers, such as reducing commission fees and changing the practices of their app stores.
  • Texas Governor Greg Abbott has enacted a bill that prevents social media companies from censoring political content that users post on the platforms. In the Press release, Abbott said that “Social media websites have become our modern public place. They are a place of healthy public debate where information should be able to flow freely – but there is a dangerous movement by social media companies to silence conservative views and ideas. ” Likewise, Brazilian President Jair Bolsonaro on Monday blocked social media companies from censoring content.

Makenzie Holland is a news writer covering major tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education journalist at Wabash Plain Merchant.


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