There were 1.02 billion internet users in China in January 2022 and is forecast to grow to nearly 1.29 billion by 2026. China has one of the largest markets of online consumers globally and remains largely untapped by many international businesses due to the challenges involved in obtaining an Internet Content Provider (ICP) license. The permit is necessary to host a website on a server in mainland China. The topic is vast, so here's an overview of what it is and the impact it has on your online business.
What's an ICP License?
An ICP license is a legal permit that enables any business, local or international, to host a website on a server in mainland China. The state-issued registration allows a website based in China to operate in the country legally.
The license is required for all eCommerce sites that want to operate in China.
Why do you need an ICP license?
Without an ICP license, your site runs the risk of loading slowly, being blocked or permanently shut down by the Chinese Ministry of Industry and Information Technology (MIIT).
An ICP license enables you to have unfettered access to China's online market. Without an ICP license, your website will be routinely checked by the country's public network security to ensure it doesn't violate national security. This constant scanning of your website content will slow down your site speed, and your site may eventually be blacklisted — even if you abide by all the censorship laws in China. The checks are a part of the Golden Shield Project, the Chinese nationwide network security framework meant to protect the country's online ecosystem from foreign influences. An ICP enables your content to be displayed to the end-user expediently with low latency and zero lost packets.
Technically you could host your website outside of China without an ICP license, but there are limitations. Check out our article detailing the perils of hosting a website outside of China while trying to reach the Chinese market.
How does the ICP license work?
An ICP license tells the Chinese internet authorities that this website has been vetted via the process of applying for a license and its many requirements. The application process of the ICP license ensures that those who hold this license have passed a series of checks.
To fully understand why you need an ICP license, you need to understand the Great Firewall of China (GFoC): In 1978, China opened up to the world for business and quickly developed a fast-growing middle class who desired access to the internet. The Chinese government was concerned about their citizens being exposed to potentially harmful content online from the wider world, such as information on guns, political issues, and pornography. In response to this, the Ministry of Public Security established the Golden Shield Project (aka the GFoC), and it began operations in 2003.
The GFoC sought to moderate and control internet traffic into and out of China, giving the government more power than you would see in other countries over the information being transmitted. The GFoC has multiple tools in its arsenal to achieve its objective:
- Apply a total DNS block by checking the IP (Internet address) against a database of blocked IPs and flat out preventing a user in China from loading a site.
- Check for certain keywords inside a URL, and if any of them are deemed sensitive or dangerous, the website will again be blocked entirely.
- Scan content on a webpage to ensure it is acceptable. If any of the content on your page is deemed undesirable, the page will be prevented from loading.
The Firewall also makes it difficult to achieve valuable SEO with search giant Baidu (used by 90% of Chinese internet users). The search engine massively favors websites hosted inside of China with an ICP license. An ICP license means you don't have to go through these rigorous checks.
What are the types of ICP licenses?
There are two types of ICP licenses that can be obtained for your website: ICP Filing (for non-commercial websites) and ICP License (for commercial websites). The main difference is that the ICP filing license is granted for informational websites that don't sell retail items. Meanwhile, the ICP license is granted to websites that engage in retail activity, which involves settling payments online.
How do I obtain an ICP license?
ICP licenses are offered for companies that have a physical location in China. In case you're not planning to hold office in China, you can go through affiliated agencies that offer ways on how to get an ICP license. Hosting and domain registration is usually part of their licensing deal as well. Additionally, hosting must be located in China. To get an ICP license, a series of requirements must be submitted to the Chinese Ministry of Industry and Information Technology. If you don't have a physical office in China, it might be a hassle for you to do everything on your own.
Opportunities with the ICP license
There's an assumption that network monitoring in China, which is what the Firewall is mostly about, is very limiting. In truth, these limits can actually open you to more business opportunities if you are able to fulfill them. If you understand how the Great Firewall works, you can do more than just reach potential Chinese customers. You can also gain valuable insights and access into the digital ecosystem of the Chinese market and diversify your business accordingly.
Once you have an ICP license however you can be assured that your message is able to reach its intended audience. Once your business has its own ICP license it will be able to compete on a level playing field with Chinese national businesses inside of China for SEO rankings and visibility. Put succinctly this ensures that you are maximizing on the opportunity provided by the Chinese market. There is no doubt that obtaining an ICP license can help to unlock the Chinese market for foreign companies, but it is true that it can add a layer of bureaucratic complexity to your operations inside of China.
Despite the challenges of obtaining an ICP license, it's worth the effort to smoothen the process of starting an online business in China. Save time and effort by getting in touch with a certified agent such as GoClick China, so you can focus on business matters and leave the rest up to the China internet experts. Our platform offers regular ICP license renewal and compliance checks.