Further Internet Restrictions for Foreign-Invested Companies

The Internet can be a tricky place to navigate in China. What is allowed, what is not allowed, and what may be allowed is constantly changing. Especially online business faces an increasing and evolving set of internet restrictions. Most of these regulations are still only available in Chinese. This makes it even more difficult for foreign companies to understand them. This article will seek to clarify the situation in China and highlight the upcoming changes.

Foreign-invested companies can participate in the vast and lucrative e-commerce market in China. Chinese rules and regulations have recently allowed foreign-invested businesses to apply for a Commercial ICP (Internet Content Provider) license, which is required in order for companies to sell their goods and products over the Internet. Until recently, this was a restricted area in China.

However, with all rules and regulations in China, what authorities allow and what is actually done in practice are two different things. In certain provinces or cities, it is possible to engage in unrestricted e-commerce after applying for the Commercial ICP license (Download our Brochure on E-Commerce here). Furthermore, each city and province might have its own internet restrictions and license requirements.

Internet Restrictions and Media Content

Media content, on the other hand, is a gray area in Chinese regulations that are becoming more and more restricted. For a long time, authorities have strictly forbidden to publish some online content like news. However, publishing other “media” over the internet usually did not pose much of a problem.

This is about to change. A new regulation taking effect on 10 March 2016 will expand internet restrictions over published content. This published material will now include maps, pictures, video games, animation, audio, and video content. It will also restrict digitized books, art, literature, and scientific publications. The new rules do leave it open for foreign-invested companies to work with domestic Chinese companies to publish online content. However, they must first seek governmental approval in order to do so, and it is unclear how difficult it will be to obtain this approval. The new internet restrictions can be found here.

Internet Restrictions and Content

If you get an approval for online media content, the content must “serve the people and advance socialist culture and socialist core values”. Therefore, language teaching apps, websites, videos, materials, and tutorials may run into difficulties when entering the Chinese market. Even companies publishing their own handbooks, instruction materials and other “content” may face challenges in the future. Foreign companies might need the help of a domestic Chinese company to publish certain content.

In the end, these new regulations will expand the control of the Chinese government. Foreign-invested companies may even face bigger hurdles when using the Internet for their business operations in China.

	Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. He has published more than fifty articles in international magazines. He frequently speaks at high profile events in China and abroad and appears as a legal expert on international TV stations. Contact: richard.hoffmann@ecovis-beijing.com
Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 10 6561 6609 or contact us directly via service@ecovis-beijing.com