Why China Censors the Internet

Flames of a public relations disaster were licking at the heels of a private equity firm when China's most notorious Internet-scrubbing company rode to the rescue.
Saving the Shenzhen-based firm's image was not cheap, and it took more than two months to douse the flames of Internet news reports and rumors claiming executives had used a Ponzi scheme to bilk investors.

Moreover, Gu knew how to make direct contact with website administrators and their colleagues. This skill – coupled with his ability to grease palms and cultivate good relations with website staffers – proved to be the key to his business success.
Gu started by charging 800 to 1,000 yuan per deleted post while still employed at Baidu. He would start working his magic after finding an image-conscious customer who wanted something scrubbed from the Internet. He would then file complaints with Baidu about relevant postings, and watch the Web until they disappeared.
A former Yage colleague said his boss managed to pocket tens of thousands of yuan during this moonlighting phase, before launching his company.

Yage's clients ranged from small, private companies to heavyweights such as China Mobile and FAW-Volkswagen, the joint venture set up by German carmaker Volkswagen and Chinese counterpart First Automobile Works. Foreign concerns, including Pizza Hut and the Japanese restaurant chain Yoshinoya, also hired Yage.
But Yage's best clients were local government officials. They were generally eager to pay for his help with building a positive image and a clean record on the Internet.
A former Yage staff member said about 60 percent of the company's profits came from business with officials from second- and third-tier cities. These clients included many police chiefs.
As part of Gu's strategy, dozens of Yage staffers spent the workday surfing the Internet in search of negative news, comments and postings about government officials. Any official whose reputation seemed to be threatened would be contacted and offered Yage's services as soon as negative information surfaced online.
High season for Yage's business with local government clients was usually just before the National People's Congress and China People's Political Consultative Conference held every March in Beijing. It's around conference time that officials typically come under attack from whistleblowers. It's also when these officials are often willing to pay a premium to see negative publicity vanish.
A former Yage staffer recalled that Gu once announced at an internal meeting that a deal with a nervous government official was worth no less than 500,000 yuan (~$80,000).
Yage's cream of the crop employees built good client relations with government officials. These included a dozen hand-picked by Gu and carefully trained so they could successfully pitch the company's services to even high-ranking officials.
Gu also found ways to profit from value-added services. For example, after scrubbing negative content for a client, Yage sales staffers often recommended Internet surveillance software that could be used to self-monitor web forums. Yage could buy a single software license for 100,000 yuan and sell it to a gullible client for 400,000 yuan.

At the other end of the food chain were website operators and administrators – and in some cases government-linked Internet censors – with the power to delete information after it was posted on the Internet.
Gu and others at Yage cultivated personal relationships with front-line website operators, mainly by wining and dining but sometimes by offering a bribe, in exchange for having certain posts deleted.
In 2009, web forum operators and other public relations companies started adopting a similar business model by arranging to delete online information for fees.

But nothing worked better than building good, personal relations with the website editors and operators who are allowed to have their fingers on the delete button. These relations were further stoked via social networks whose members worked for Yage and similar companies.
Major Internet companies started taking note of the scrubbing activity, prompting some to tighten rules. Major news portals such as Sina, Tencent and Netease, as well as niche sites such as Hexun, started to more closely scrutinize the editing process that follows web post publishing. Any unauthorized deletion of website information at these companies could cost a person his or her job.
News website operators maintain regular contact with Beijing city government officials at the Internet Management Office. All parties hold a regular meeting every Friday, and through the course of each week officials use phone calls or text messages to convey specific orders, including any orders to filter out key words from search functions.
Officials close to the Haidian police probe and raid told Caixin that some government officials use these official order channels for personal benefits. Indeed, last year police arrested a staff from Beijing's Internet Management Office for alleged bribery.

Among those rounded up at Baidu was a man surnamed Xu who authorities said deleted 76 posts on the night of May 29, charging 300 yuan per scrub. He kept 70 percent of that money and handed over 30 percent to a mediator.

These projects involved public relations companies that would produce or re-post pieces that smeared companies or at least threatened their reputations, have them posted on Qianlong, and later have the pieces removed after the targeted company paid a fee.
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Yage at first posted advertorials disguised as news. Later, the Qianlong business site started a "Company Black List" section with hundreds of negative reports about various firms beside an advertisement offering Yage's Internet firefighting services.
Several companies like Yage also won access to the website and started their own means of extortion. A manager at an education company told Caixin his company once paid Yage to delete a negative news piece appearing on Qianlong, but then had to pay another public relations company after the same news appeared elsewhere on the website.

So far, Hu has been the only target of the police probe into Qianlong. Coincidentally, he has a relative who works for the Beijing government's Internet office.