Following numerous attempts to crackdown on VPN services over the years, the Chinese government has reversed course and will now allow foreign entities to invest in domestic VPN companies.
Due to the Great Firewall which restricts Chinese internet users from accessing a number of sites and services online, there has always been high demand for VPNs that work in China among both consumers and businesses.
While consumers often turn to VPNs to bypass the country’s internet restrictions, businesses rely on them to promote their products to the global market using Twitter and other social media networks that have been banned in China.
Now under China’s new regulations, foreign companies will be able to hold up to a 50 percent stake in domestic VPN companies.
Attracting foreign investment
Although foreign companies will now be able to invest in Chinese VPN firms, they will still be required to maintain the country’s internet censorship requirements as well as store data in local servers that can be accessed by authorities and report on users who are trying to bypass censorship measures.
The decision to allow foreign investment in domestic VPN firms is part of eight policy amendments recently announced by China’s State Council that also seek to attract foreign investment in other industries including the performing arts, adult education, travel, non-profits and telecoms.
It may seem that the move goes against China’s own efforts to regulate tech firms and the internet overall but since half of every VPN company will still be owned by a Chinese firm, the new policy will bring in foreign money while domestic VPN services will still need to comply with local laws.
We’ll likely hear more on the matter once foreign companies actually begin investing in domestic VPN services in China.
Via The Register
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