Major Chinese technology companies such as Baidu and Huawei have been rising on the world stage.

OPINION: In the last couple of years, technology companies have had to face the music with Chinese authorities.

Foreign technology giants such as Microsoft and Qualcomm faced anti-monopoly investigations. In most cases, these companies were forced to admit their 'wrongdoing' or face even greater consequences for not complying.

At the same time, major Chinese technology companies such as Baidu and Huawei have been rising on the world stage.

But anti-competition investigations and rising competition are just the tip of the iceberg in the grand scheme of things.

New laws

Starting this year, a new law will take effect that requires Internet and telecommunications companies operating in China to provide technical assistance to Chinese law enforcement. This could include the decryption of sensitive user data in any investigation relating to terrorist activities.

Under Chinese law, the data does not need to reside in China, nor will foreign companies be required to grant Chinese authorities access into their systems. It merely requires the 'cooperation' of the foreign technology company to release information relating to particular users.

This law builds on earlier ones that ease regulations on or directly subsidise purchases of home-grown technology companies.

Essentially, China is seeking to distance itself from the use of foreign technologies in the military, state-owned enterprises, government agencies and banks.

This has come about as a result of national security and counter-terrorism measure and in response to the complexity of having to deal with foreign-owned technologies.

China aims to have replaced foreign technologies in these areas with locally-sourced ones by 2020.

This is not good news for foreign players such as Qualcomm which has poured billions of dollars into the Chinese market in light of its stagnant shares in other markets.

Government interventions

Meanwhile, new laws have been created to help govern the Chinese internet space. For example, foreign companies are to be banned from 'online publishing' starting in March this year.

However, it is still unclear what 'online publishing' actually covers. Nonetheless, the fundamental reason for this higher-order censorship is to control the extent of Western media influences in China.

Major government intervention is however not restricted to China.

Just in the past couple of weeks, United States authorities requested that Apple provide a tool for unlocking an iPhone that had been seized as evidence in a terrorism case.

While this can be thought of as a one-off incident, one can imagine that with terrorism and cybersecurity on the rise, it is unlikely to remain a one-off, as Apple's chief executive Tim Cook also suggests. Privacy has become an immediate issue.

We may recall that Huawei and ZTE experienced difficulty selling to US telecommunications providers after they were labelled a security risk by a congressional report in 2012.

One may wonder if a US company like Apple would also be labelled in this manner.

Where is the line drawn?

In a nutshell, technology companies are caught in the cross-fire between national security and privacy.

Meanwhile, the focus remains on China and its major technology consumption market.

Over half of Chinese consumers use their computers for shopping at least once a week. Six of the world's top 15 social media sites are Chinese-owned.

Business-to-consumer e-commerce sales are expected to double those in the US by 2020.

Foreign companies are trying to keep themselves in the Chinese playground with the help of local partners.

Even Microsoft has been adapting to the Chinese landscape. It works with a local partners to customise Windows for Chinese users, and also makes Baidu its Windows search default in the country.

We can expect to see more regulations that govern technology areas in the future. Ultimately, foreign technology companies will be tested on their ability to adapt and innovate in light of these new regulations and increased competition.

Siah Hwee Ang is the BNZ Chair in Business in Asia at Victoria University of Wellington.