Example Of Effect On Business Article Review

China Internet Restrictions Hurting Business, Western Companies Say. Appeared on 12 Feb. 2015

Summary

The article by Chin (WSJ.com), describes the negative impact of internet restrictions on European and US companies that operate in China. According to findings of a new survey conducted by the European Chamber of Commerce, approximately ninety percent of 106 European companies that do business in China state that Internet limitations are harmful for their operations. The data was acquired between January 28 and February 6. It is important to note that in June, only up to fifteen percent of European firms complained about negative impacts of blocked online tools and websites on their businesses. Moreover, around eighty percent of the respondents reported asserted that the harmful effects of internet restrictions have worsened since the beginning on 2015. The Chamber’s survey also reported that thirteen percent of the respondents had put R&D investments on hold, or had started seriously reconsidering setting up R&D operations after the new limitations were imposed.
Responsible Chinese governmental institutions did not proceed with an immediate response. In previous years, Chinese government officials have been firm on their policies, stating that internet security is a sovereign matter. They have also argued that government of other countries also place restrictions on internet. However, since recently, the impact of Great Firewall has intensified, and Chinese government has become more aggressive in defending it, implying that without such measures many of the Chinese top tech companies would not have become as successful as they are now.
Indeed, in recent months, China has tightened the grip on the internet, severely limiting the availability of foreign online services and web-sites that are crucial for effective business operations, and which had previously been in a relatively free access. Specifically, in January the infamous Chinese filtering system, often referred to as the Great Firewall, has been updated. As a result, virtual private networks (VPNs) are now being block much more intensely, and accessing such services as Twitter, Facebook, and Google’s cloud, mapping, and mail services is now nearly impossible.
European companies were not the only ones who felt the negative impact of intensified internet control. The recent annual survey conducted by the American Chamber of Commerce in China indicated that eighty three percent of its 500 member companies report negative consequences of websites’ block and internet censorship. Major complains are slow speed of internet and incredible complexity of accessing industry-related information on the web. Seventeen trade groups that represent the majority of segments of the US tech industry wrote a letter to US government officials last week, requesting Washington to influence China to reconsider the new regulations, which would force the US technological companies to disclose important business information.

The article demonstrates a vivid example of a situation where a country’s legal environment, namely governmental regulations, has a heavy impact on companies that operate in this country. With the intensifying effects of globalization and increase in accessibility of information, especially through the internet, over the past several decades, limitations of internet usage can pose a serious problem for business. Today, a large number of business operations largely depend on the internet, including many functions of marketing, distribution, human resources, operations managements, and even strategic planning. Firms spend hundreds of millions of dollars to develop effective online advertising campaigns, conduct market research, establish supply chain activities, manage customer service, and perform a variety of other vital business activities through the internet. Consequently, unreasonably strict governmental regulation of the cyber-space bears significant negative consequences for the companies and harms their effectiveness.

Works Cited:

Chin, J. "China Internet Restrictions Hurting Business, Western Companies Say" The Wall Street Journal. Dow Jones & Company, 12 Feb. 2015. Web. 13 Feb. 2015.