China's cabinet has approved a new plan that will allow foreign telecoms to own as much as a 50 percent stake in joint ventures that will provide VPN services to foreign businesses operating in Beijing.
As reported by Caixin, foreign businesses operating in China rely on VPN services in order to connect to their corporate networks overseas as well as to access sites and services blocked by the country's Great Firewall.
Beijing first revealed its plan to allow overseas firms to invest in VPN services within a trial zone in August of last year. Since January of 2017, telecom and internet services providers that offer VPN services have been required to obtain licenses from China's Ministry of Industry and Information Technology. At the same time though, the country has launched a crackdown on unlicensed VPNs.
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According to the Beijing Municipal Communications Administrations, there are currently around 20 licensed VPN operators in China including Beijing Sinnet Technology and cable TV operator Beijing Gehua CATV Network. Beijing's new plan will give foreign businesses more choice when it comes to their VPN provider while also opening up the market for foreign telecoms that want to create joint ventures to offer VPN services in the country.
Open for business
In January of last year, the UK telecoms giant BT Group became the first international company to gain both nationwide internet service provider licenses as well as a license to offer VPN services in China. These licenses allow the firm's Chinese joint venture BT China Communications to to provide VPN services for foreign companies operating in the country as well as the ability to bill them in local currency.
In addition to VPN services, the recently approved plan will also allow multinational companies in Beijing to setup wholly foreign-owned financial service companies. This will support acquisitions of third-party payment businesses, remove foreign ownership limits on information service businesses and help foreign firms provide software as a service (SaaS) offerings.
While China is opening up its VPN and financial services sectors to foreign businesses, the US state department is doing just the opposite through its Clean Network program which is currently being used to prevent Chinese telecom operators such as China Telecom Corp and China Unicorn from doing business in the country.
By opening up investment in VPN services to foreign firms, China may finally be softening its historically hard stance on VPN usage within its borders.
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