Representatives from Cisco, Google, Microsoft MSN, and Yahoo last week faced hours of tough questioning from lawmakers troubled by their companies' too-close-for-comfort involvement in Chinese human-rights violations.

The House of Representatives hearing coincided with the release of a draft bill, the Global Online Freedom Act of 2006, submitted by Rep. Chris Smith, R-N.J., that would prohibit search engines and content-hosting services from locating servers in an Internet-restricting country--a designation initially bestowed on China, Iran, and Vietnam. The bill calls for the creation of an Office for Global Internet Freedom as part of the State Department to promote free expression and to combat censorship.

Rep. Brad Sherman, D-Calif., is drafting similar legislation to prevent U.S. companies from providing confidential information to repressive governments unless certified by the U.S. government. It's a response to allegations that Yahoo handed over to the Chinese government information that was used to jail a man for subversion.

It's unclear whether either piece of legislation, if passed, would affect other companies doing business in the world's fastest-growing market for everything from automobiles to technology. Google has come under fire because it censors search words in China that are offensive to the Chinese government, Microsoft MSN took down a blog after a government request, and Cisco sells China the network equipment to support its oppressive oversight of the Internet.

	All in favor of a tongue lashing, raise your hand. Photo by Chris Kleponis/Bloomberg News

Boiling Point
The issue of human rights in China has reached a boiling point in Washington--and that's likely to have an impact beyond the Googles and Yahoos of the world. Secretary of State Condoleezza Rice last week established the Global Internet Freedom Task Force to monitor how technology is used for repression and to modify Internet governance structures to best promote freedom of expression. That same day, U.S. Trade Representative Rob Portman presented a review of trade relations with China in a report titled "U.S.-China Trade Relations: Entering A New Phase Of Greater Accountability And Enforcement."

Besides the business opportunities, China is considered a high-potential locale for offshore outsourcing. John Cestar, co-CEO and co-founder of Freeborders, a company that delivers IT services from China, doesn't see the issues facing Google, Microsoft, and Yahoo as concerns for his clients. But if laws were proposed to restrict IT deployments in China in a more general sense, Cestar says painful inconveniences could result. "If we had to move [servers] out of China, we could do it," he says. But he adds, "A lot of our clients have asked us to replicate their U.S. environment in China, which is why we have them over there. So it would hurt our ability to serve our clients well."

James Senn, director of the Center for Global Business Leadership at Georgia State University, notes that while censorship isn't an issue every company will face, China's fluid legal system poses a broader concern for businesses. "The issues of any company going into China to do business are going to be the same--dealing with the existence, or lack of existence, of the law and the inconsistency of its enforcement.

"What's different about Google and Yahoo is the fact that the Internet is involved," Senn says. "The reach of those companies and the reach of what they distribute is so extensive."

Still, more and more businesses are on a quest to achieve true globalization, which includes extending and supporting data anywhere. There's no guarantee of a smooth road for businesses looking to bring China into the fold.