The fractured web is the new normal. What if tomorrow we in China could sit down at our computers and access YouTube and Facebook and Twitter with 100% freedom. Would the whole blockade thing just blow over?

Nope. Even if every switch gets thrown and the blockade comes down completely, the job is already done. There are two internets – one Chinese and one International. If anything, there are likely to be more fractures and restrictions.

China has already demonstrated that it CAN block the internet. The rest of the conversation is about whether or not China WILL block the internet.

If you know that something is possible then it’s just a matter of time before it becomes a reality. Businesses investing in global IT will have to re-calculate their China costs. For CIOs and international managers the decision chain is clear – and the news is likely to be expensive. Many companies will need independent back-up systems – even for the global parts of your system that will be unaffected by a blockade. If you can’t get inventory information out of Shenzhen, then it really doesn’t matter how well the rest of your global MIS is working.

Web3.0 – the Digital Border Check.
Border checks always have a valid security rationale – and an unpredictable economic cost. Once they start, it’s hard to know what responses will emerge from the system. The US and other western countries may follow suit – attempting to increase their ability to monitor and filter. Large private firms will also get involved, as they try to monetize existing traffic, raise switching costs and manage the security of their own networks. More publishers will charge fees or require verifiable log-in identities.

The age of the wide open internet was coming to a close anyway – but China’s blockade has raised the stakes. Beijing demonstrated that a quarter of the world’s population (and a higher percentage of internet viewership) could be effectively fenced off with no significant protest.

It’s Just Policy.
It’s not personal, national or even cultural. It’s just policy.

Usually industrial and national security policies are at odds with one another. This time they dovetail beautifully. This must have been a no-brainer for Beijing. Suppress potentially disruptive voices and protect key industries at the same time — in one fell swoop. Everyone from the Party leadership to the business community loves the idea. The downside if very limited – at least in the short term. Chinese grads are going to end up a little less skilled and hirable - but it will be a couple of years before even that shows up in the market.

Why would the Chinese government lift the blockade now? The hard part is putting it in place and justifying it to the world. They have the tech – and no one blinked.

The Damage Has Been Done. Learn the lessons
The blockade has made China’s internet a seismically active zone – the ground can shift at any moment. Today 1.3 million people live on another tectonic plate, and it has the potential to twist further away from the rest of the planet without warning. In the short and medium term, we can expect to see the following developments:

* This will harm China’s attractiveness as a regional center. Media, marketing, entertainment, news and publishers will have a hard time justifying their international offices in China.

* Makes branding harder – both for Chinese companies trying to develop an international brand and for international marketers trying to reach China’s middle class.

* Increases soft-skills gap – China’s trainers, coaches and teachers just got a new service to sell. Look for armies of Chinese grads who will need special training in how to ‘social network for Western business’.

* Favors companies that can spend big in two completely different/distinct internets. Entrepreneurs and private Chinese firms will have to choose where to allocate scarce assets – in the Chinese internet or the Western one. Well funded MNCs and Chinese SOEs will pay without a second thought.

*Reinforces VC model of participation – It will be more effective for international investors to incubate new Chinese firms than to try to migrate existing brands into the Chinese market.

Dos and Do not Dos: An Action Plan for Web 3.0

Do prepare for a day when Google goes down and doesn’t come back. You’ve been warned twice already – Google does not have a special pass to the Chinese internet. Every time Google is hard to find, everyone in China says, ‘we can’t do business without gmail and Google tools’ – and then the lights come back on and it’s business as usual. Well, one day the lights may not come back on. Do you have a back-up for all of the Google systems you use – including mail, chat, Adwords and Google Docs?

Do prepare for a more institutionalized, bureaucratic internet with more border checks on data. If you have a single-channel information policy (everything goes over our own corporate servers, or gmail, or a commercial system) then you are engaging in risky behavior. You need alternatives, plan Bs and contingency plans. Start auditing your shop to make sure that you can deal with the unexpected.

Do find ways to turn this to your advantage. There is value in being able to get in touch with groups on both sides of the firewall. We all used to have the same free, open access — but that simply isn’t true anymore. If you have established channels or are reaching large numbers of potential buyers in China, then your value in the marketplace should be rising.

Have a plan for reaching the real Chinese middle class. Find a way to bring them into your data measurement tools. It turns out that we were never really seeing them on Facebook or Twitter, and we certainly won’t in the future. So what is your plan? You have to identify your Chinese market, target them with appropriate messages and then capture their data in a way your existing tools can make use of.

Have considered, itemized Plan B for everything and anything IT related. A lot of you standard cost-metrics are based on the assumption of a global internet. Now you have to treat China like a separate entity. That means a separate IT budget, a separate advertising and marketing budget – and maybe different teams or outsourcers. Synergies and economies of scale just got a lot harder to achieve in the international China market.

Do Not Dos:

Don’t assume that you are seeing the ‘real China’ on Facebook or Twitter. The Chinese people you are seeing on these services make up a new, very interesting demographic - but they probably number in the tens or maybe hundreds of thousands. The hundreds of million middle class Chinese have moved one giant step further away from you and your desktop. A key question for international marketers is ‘how similar are the real Chinese and the Facebook Chinese’? Answer: Probably very different – and moving further apart.

Don’t assume that the government will have to do anything in particular. It is very hard to apply pressure on the Chinese government during the best of times on the most pressing matters. These aren’t the best of times, and no one seems to view this as a pressing matter. Furthermore, the policy-makers in Beijing are probably making themselves EXTREMELY popular with this blockade – from the business community to the national security brass to the China First crowd. Internally, this policy has been a huge success. There is very little reason to think that Beijing feels any pressure over this at all.

Don’t think that the same thing can’t happen anywhere and won’t happen everywhere. You’ve been warned. You’ve already seen it.

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