Having just returned to the US from a post in a Beijing technology law firm, I can tell you that this move has been coming for a long time and nothing is going to stop it. China's state-owned enterprises are very aware of emerging technologies like VOIP and have the power and motivation to protect the technologies that have supported their bottom line since the '80s. These behemoth companies lack the know-how to scale tech like VOIP to the consumers in the Eastern cities who are actually starting to develop disposable income, so they simply use their government muscle to stonewall and prevent smaller players from introducing fresh products. This is a classic example of regulators being in bed with the corporate goons and the consumer losing out, and is one reason why America's economy will retain an adaptive advantage the forseeable future. This is clearly an enormous obstacle for the American and European entrepreneurs who are, increasingly, betting their reputations on selling slick new technologies to China's 1.3 billion consumers. You just can't brush outdated Chinese corporations aside by marketing a better product. Smart entrepreneurs will find a way to get in bed with the government too.
But, as another poster pointed out, you can still use Skype in Shenzhen -- China's big problem is enforcement. The software dealing with internet searches in China is primitive and random -- searching 'map of Guangzhou' is equally likely to earn you a 1-hour Google ban as searching 'falun Gong resistance movement'. China's government is not large enough to police 360 million Internet users, and their engineers are not as good as America's, so any kind of truly effective enforcement seems farfetched. They face a problem of both scale and skill. In the US we hear all these myths about the repressive internet regime in the PRC, but in reality it's kind of a farce. You really have to consider the size and pace of this country -- Shenzhen is a city larger than New York that was a fishing village in 1995. Who can really keep track of such rapid development? What I think will happen is that people will always be able to use the Skype technology in some capacity, but the company (and its peers) will be on the rocks in terms of expanding in China until they find a way to sell the idea to the government.
Four days ago, Skype signed a joint venture agreement with the Chinese wireless company TOM Online. What I think you are seeing here is that Skype bet on TOM's connections and know-how to protect them from the Chinese government, but in fact TOM's size and political weight are tiny compared to China Telecom's, so they are getting thrown around because China Telecom perceives a threat. What Skype should have done is tried to sell the idea to China Telecom or China Mobile, even if they would have taken a less lucrative contract. It will be interesting to see where this goes from here, but I predict until Skype redefines their strategy and relationship with the government, they will be kept out of the market.
Slashdot Mirror
Not compared to China, where you have companies like China Telecom which is 77.8% owned by the government. But I see your point.
Having just returned to the US from a post in a Beijing technology law firm, I can tell you that this move has been coming for a long time and nothing is going to stop it. China's state-owned enterprises are very aware of emerging technologies like VOIP and have the power and motivation to protect the technologies that have supported their bottom line since the '80s. These behemoth companies lack the know-how to scale tech like VOIP to the consumers in the Eastern cities who are actually starting to develop disposable income, so they simply use their government muscle to stonewall and prevent smaller players from introducing fresh products. This is a classic example of regulators being in bed with the corporate goons and the consumer losing out, and is one reason why America's economy will retain an adaptive advantage the forseeable future. This is clearly an enormous obstacle for the American and European entrepreneurs who are, increasingly, betting their reputations on selling slick new technologies to China's 1.3 billion consumers. You just can't brush outdated Chinese corporations aside by marketing a better product. Smart entrepreneurs will find a way to get in bed with the government too.
But, as another poster pointed out, you can still use Skype in Shenzhen -- China's big problem is enforcement. The software dealing with internet searches in China is primitive and random -- searching 'map of Guangzhou' is equally likely to earn you a 1-hour Google ban as searching 'falun Gong resistance movement'. China's government is not large enough to police 360 million Internet users, and their engineers are not as good as America's, so any kind of truly effective enforcement seems farfetched. They face a problem of both scale and skill. In the US we hear all these myths about the repressive internet regime in the PRC, but in reality it's kind of a farce. You really have to consider the size and pace of this country -- Shenzhen is a city larger than New York that was a fishing village in 1995. Who can really keep track of such rapid development? What I think will happen is that people will always be able to use the Skype technology in some capacity, but the company (and its peers) will be on the rocks in terms of expanding in China until they find a way to sell the idea to the government.
Four days ago, Skype signed a joint venture agreement with the Chinese wireless company TOM Online. What I think you are seeing here is that Skype bet on TOM's connections and know-how to protect them from the Chinese government, but in fact TOM's size and political weight are tiny compared to China Telecom's, so they are getting thrown around because China Telecom perceives a threat. What Skype should have done is tried to sell the idea to China Telecom or China Mobile, even if they would have taken a less lucrative contract. It will be interesting to see where this goes from here, but I predict until Skype redefines their strategy and relationship with the government, they will be kept out of the market.