Thread by @kendraschaefer

An opinion piece today on people.cn - The best take I've read so far on Beijing's views and motivations re: crackdown on Didi, IPOs and the move to reign in internet companies. Some key quotes below. 1/x finance.sina.com.cn/tech/2021-07-0…

Tech companies have been in an era of "barbaric growth": "The so-called end of the barbaric era means that in addition to laying down systematic rules, the rules needs to be truly implemented to maintain healthy [market] order." 2/16

"The implementation of China's cyber security review mechanism indicates that Chinese Internet companies will officially bid farewell to the barbaric growth stage." 3/16

"The Personal Information Protection Law will under go its 3rd draft in August, and it will be implemented [soon after]. Coupled with the Data Security Law that will become effective on September 1, the foundation of the digital age has basically taken shape." 4/16

"That means [Chinese tech companies have] entered a new stage - the compliance stage. In the new stage, Internet companies need to regard compliance with laws and regulations as an important part of their continued operations." 5/16

"In the barbaric growth stage, internet companies have been laissez-faire about [security and compliance]. In additional to long-standing problems such as personal information collection and cross-border data flow, there are also huge hidden dangers at the capital level." 6/16

"China has restrictions on foreign investment in certain areas such as the Internet, news media, education, and finance. However, through the VIE structure, foreign investment has bypassed many investment restrictions and has entered almost all areas of China's Internet." 7/16

"It is undeniable that the VIE structure made important contributions to the development of China's Internet. ... But through the VIE structure, almost all Internet companies in China have their rights and interests in foreign countries first." 8/16

"This backwards situation has become a huge hidden danger in national network security. Therefore, these Chinese Internet companies should step out of the gray area of ​​the VIE structure and move toward a more rational and normalized corporate governance structure." 9/16

"[They should adopt a] structure that not only meets the needs of national cyber security, but also facilitates corporate financing and listing, and [facilitate] opening the industry [through] sound development practices." 10/16

"In short, next, Chinese Internet companies must step out of the comfort zone of barbaric growth and adapt to China’s new institutional environment and the basic requirements of network governance." 11/16

"Compliance [is not only about] risk management for Chinese Internet companies, but also the only way for companies to cope with the increasingly complex international environment and seek greater certainty." 12/16

"In the short term, compliance is a cost burden for enterprises, but in the long term, it is an important manifestation of the competitiveness of an enterprise." 13/16

"Many of the problems with the Internet in China today are caused by the lack of legal compliance. This is a long-term debt, and [the current crackdown is a] make-up lesson. " 14/16

In particular, at the data level ... Internet companies have always been outside the system by virtue of their monopoly status, or the "black box" created by a lack of supervision." 15/16

This is what we've been saying for the last few days: Beijing is breaking some eggs to make an omelette. It wants its internet companies to be compliant at home, and their first loyalties to be domestic - that's the prerequisite for going abroad. 16/16

Clarification (thanks @ChorzempaMartin) - original source not People.cn, it's here - opinion.huanqiu.com/article/43ov2j…