China does not need VPNs to innovate

During the conference call on Apple’s third-quarter earnings, CEO Tim Cook touched on the company’s decision to pull out VPN (virtual private network) apps from its China app store.

The reason: Apple had to follow the rules in markets it operates in – and that includes China, a brutally competitive market that has proven to be something of a Pandora’s box for US-based companies.

Cook had said Apple would rather not remove the apps, and was hopeful that over time, the restrictions will be loosened “because innovation requires freedom to collaborate and communicate”.

No one better understands this than China does. In How China’s Leaders Think, Robert Kuhn, an investment banker who has advised the Chinese government, says China’s leaders know that free access to information is critical for technological advancement and competitive success.

“On the other hand, they worry about potentially disruptive consequences of such free access which can deliver malicious, salacious and seditious information,” Kuhn says.

“Hence the dilemma: restrict information and retard progress? Or remove restriction and risk instability?” he adds.

The Chinese government has clearly decided that the risk of instability is going to be higher in a rising superpower of over 1.3 billion people that’s still in the process of moving to a market-based economy. This transition could be tumultuous, if restrictions on access to information were not in place.

China has shown that it does not need the Googles of the world – and VPNs for that matter – to be in China to provide the means to collaborate and communicate, in order to foster the innovation it needs to succeed.

Chinese companies are already doing a great job, and in some cases, even delivering innovations that have eclipsed that of their Western counterparts.

Just look at Tencent with its ubiquitous WeChat platform used by almost 900 million Chinese for almost anything from ordering food at restaurants to hailing a ride, and Alibaba’s Hema stores that combine the best of online and offline shopping.

These Chinese companies make Facebook, WhatsApp and Amazon look outdated. And they have done so while staying behind the Great Firewall of China.