1.5 Billion Reasons Why Your App Needs to Enter the Chinese Market—And How to Do It

    Posted by Eric Choi on 3/7/18 7:59 AM
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    Entering China remains a complicated venture for many companies. How can apps scale the Great Firewall without running afoul of laws?

    Why your app needs to enter the Chinese market 

    Nearly 1 in 5 humans alive today reside in just one country: the People’s Republic of China.

    In the past several years, global enterprises in the technology, retail, luxury, and automotive segments have rushed to China; General Motors is eyeing electric vehicle expansion, fashion brand Chanel is catering to the Chinese luxury market, and tech giants like Uber and LinkedIn have tailored their products to local languages and culture. It’s clear that China poses a major growth opportunity for businesses who know how to navigate the market and build systems that work for both Chinese operations and the rest of their international business interests.

    For other companies that have their eye on this massive market and the 1.5 billion people who call China home, entering the market remains a complicated venture full of both tremendous opportunity and obstacles.

    While the complex relationship between foreign companies and the Chinese government serve as one barrier to entry, the black box of unknown circumstances and variables have made local Chinese partnerships a must. In the software business especially, companies see massive opportunity just behind the Great Wall, requiring partnerships with a Chinese company to navigate through myriad governmental complexities. However, there are still challenges above and beyond establishing trustworthy local partnerships.

    For software companies specifically, until recently, the biggest regulatory obstacle to selling software products to the Chinese consumer was clear — to operate inside the country with a registered office and local staff or through an existing conglomerate. While this could be inconvenient, or in some extreme cases detrimental to the business as a whole, foreign companies have viewed China as such a promising market that the potential revenue outweighs the challenges and simply accepted the burdens.

    Building IT Infrastructure for Today

    In today's global marketplace, building a software company is a global exercise that transcends borders, culture, and local regulations. It’s difficult enough to maintain infrastructure to run your business inside datacenters in your own country, and that complexity increases exponentially when trying to build global infrastructure that includes China.

    "As developers and enterprises grapple with legislative changes around the globe, they are being increasingly challenged to rethink their assumptions around software architecture and data availability,”  reports Fintan Ryan, an industry analyst at Redmonk. “The commercial opportunities available in markets such as China make it beholden on developers to design applications which can be easily segregated to meet future demand."

    The very basis of this network architecture is secure pipes between instances and data end-points. While this is fairly easy to accomplish inside Amazon Web Services or a similar public cloud platform, it gets vastly more complex when systems must communicate across regions to keep databases in sync, perform backups, or register transactions with HQ. In either scenario, there is one fundamental building block which keeps those pipes secure, in-sync, and on time: the Virtual Private Network, or VPN.

    Challenging the VPN Legacy

    The VPN has developed a recent negative reputation with the association of piracy, illegal torrents, darknet drug markets, and hacking. In reality, VPNs are a basic construct of providing secure access, not just a way to evade network surveillance. Especially within China, Chinese citizens, foreign nationals, and business visitors have long used VPNs to get around the Great Firewall of China to access sites, such as Google services or foreign social networks, that have been blacklisted by the Chinese government. 

    Of course, to China, this ability to hide traffic may be seen as a challenge to the established rules. They have started cracking down on the distribution of VPN software, from products offered on iOS to international VPN providers who, until now, could circumvent the Great Firewall.

    In the not-so-distant-future, VPNs, once a viable solution, may no longer be an option in China.

    Two Suboptimal Options

    This turn of events presents a significant problem to global companies who have their sights set on China. The options, essentially, are to either give up on the market completely, which quite frankly, is no longer an option for any company looking to grow international revenue, or to encapsulate the entire business infrastructure and ship it in a confined fashion to China. That means removing all outside entanglements, picking up your database, application logic, caching layer, load balancers, firewalls, and user accounts and moving them to a foreign environment, completely cut off from the world outside of China.

    Of course, that's a slightly dramatic picture: services and outside systems can still be accessed from inside China, but the very security of that access is now in question. Can you trust your infrastructure to be secured through SSL alone? That question would be laughable five years ago, but after frequent discovery of vulnerabilities in OpenSSL, it is not necessarily the foundation you want to build your entire network security upon.

    Developers and administrators are left with the unthinkable: to untether their applications from the world around them, to undo a decade of distributed systems development and research, and bifurcate their networks into two segregated operations: China and everybody else.

    Some companies choose to use proxy servers to penetrate the Great Firewall, but this solution is fraught with reliability, latency, and compliance challenges as well.

    Another way to circumvent the Great Firewall used by many companies with no datacenter presence in mainland China is the proxy server. The most common is the “reverse proxy”, which sits behind the Great Firewall and directs the requests of the end users to the backend servers running your application. However, this solution is far from perfect as it suffers from inherent reliability and latency problems and, in most cases, is not compliant with Chinese laws and regulations.

    As both a technical and business concern, these limitations and issues may prevent many companies from attempting entrance into China, making the Chinese market that much more valuable for those companies that do find a viable solution. In some sense, these challenges also create a new strategic advantage through reduced competition.

    The Path to 1.5 Billion Users

    AppScale, a serverless platform that allows customers to build and run scalable web and mobile applications, is an alternative solution that removes the need for firewall "workarounds" while respecting local Chinese regulations.  The most common example is taking an existing Google App Engine application and migrating it into any major public cloud or datacenter, including Alibaba's public cloud. Further, AppScale allows for the rapid development of new applications on an easy-to-manage platform that enables multi cloud deployment and portability to any infrastructure, now or in the future.

    AppScale removes the need for hardware and formal business operations within China, eliminates VPN issues and SSL vulnerabilities, and allows you to migrate data, updates, and transactions effortlessly between Chinese users and HQ, thus retaining the same benefits and functionality that has made your web or mobile application successful in other markets.

    Our CEO, Woody Rollins states, “Uncertainty is driving global industry with mission critical applications to stay independent of governmental regulations. AppScale gives total control back to the application owner without the burden of rebuilding.”

    As China moves in on VPNs and once-secure methods lose their effectiveness, a scalable, legal, and secure platform is vital to entering the market. While moving data and applications to China may seem overwhelming, it's a good opportunity to assess your situation. If 1.5 billion potential new customers is indeed enticing, then it's time to start identifying proactive solutions instead of re-architecting and segregating China from the rest of your environments—before China cuts off secure pipes in and out of the country.

    The Chinese market is the next frontier in software expansion and growth and AppScale can help you get there. 


    Topics: Industry News, Industry Insight

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