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Financial Setback for LinkedIn Amidst New Regulations in China

Financial Setback for LinkedIn Amidst New Regulations in China

The new stricter regulations in the country come after a young college graduate committed suicide after falling for a deceptive pyramid scheme in July.

LinkedIn is not only held up as a business model for how foreign-owned internet companies can do business in China but it also serves as a case study for just how difficult that task can be. The jobs and professional networking service this week blocked individuals from advertising available jobs on its site in China.

This came after it apparently ran afoul of new regulations set out by the government which requires the site to verify the identities of individuals who post jobs. This is according to a professional source who is familiar with the situation. In a statement, LinkedIn said that companies may still post job listings. It also stated that it did not know when it would again allow the same to be done by individuals.

The Chinese government increased its scrutiny of online job postings in August. This was in response to an increase in online hiring scams. Most of which were for pyramid schemes. Under the new regulations, companies have to verify the identities of those posting online job advertisements.

According to the source, officials from China’s capital Beijing have been following up on the new regulations with audits. The source, who is not authorized to speak publically has asked for their identification to remain anonymous. In a country that blocks online features including Facebook, Google, and YouTube, LinkedIn has maintained its online presence.

It continues to operate in China by adhering to strict local rules. LinkedIn does this by censoring content that is seen as sensitive by Chinese authorities. It also enforces strict limits for members to be able to create and join online groups. Partial ownership of LinkedIn’s Chinese operation was also given to local investors.

In more recent months Beijing has stepped up its already strict internet reins. This has made it increasingly difficult for Internet-based companies to manage their businesses in China. The new stricter regulations in the country come after a young college graduate committed suicide after falling for a deceptive pyramid scheme in July.

According to local media, the 23-year-old was awarded a job as a software developer. The job which was posted on an employment website later forced him into becoming part of a pyramid scheme. The young man had borrowed hundreds of dollars from close family and friends to invest in his new job. Once for discovered he had been part of the scheme, he drowned himself on the outskirts of Tianjin. But, his death was only one of several reported since summer.

This spurred an outcry in the country and prompted the government-led crackdown on similar pyramid schemes. For one of the few foreign internet companies which were giving the go-ahead to operate in the Chinese market the disabling of a revenue-generating tool is seen as a huge setback.

It is unknown exactly how much money Microsoft-owned LinkedIn generates in China.

What is known however is that the company continues to struggle in becoming a major market player in the country? This can be attributed to China’s exclusive internet culture. There are many popular hiring sites but many people opt to manage professional contacts in WeChat, the country’s most popular social network.

About Ali Raza

Ali is a freelance journalist, having 5 years of experience in web journalism and marketing. He contributes to various online publications. With a master degree, now he combines his passions for writing about internet security and technology. When he is not working, he loves traveling and playing games.

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