The Egyptian government's Internet service blackout cost the economy somewhere around $90 million over five days, according to the Organization for Economic Cooperation and Development (OECD). How much would it cost your company if it happened in China? How would the company's manufacturing supply chain run, notify suppliers of changes, and alert logistics companies?
Although unconfirmed by the Chinese government, at least one law enforcement officer watching the flow of information across the Internet tells me China has been developing a self-sustaining Internet. Most supply chain executives doing business in the country know government-run companies and Chinese-friendly companies in and around China are favored. Not difficult to imagine, given the troubles Google (Nasdaq: GOOG) has faced in recent years and the strength Chinese search engine Baidu gained.
Long-term shifts in the global economy and changes in governmental infrastructures will put pressure on supply chains. Sixty-eight percent of global executives responding to a recent McKinsey survey said supply chain risks will increase in the coming five years.
A self-sustaining Internet would allow companies operating within China to continue in the event of a disruption but limit communication to the outside world. I'm not suggesting this will occur, but recent events in Egypt suggest the possibility, especially in an authoritarian country where companies require technology to run businesses and profits. It's not as likely for this to happen for those manufacturing in Vietnam or India, because these governments have not set up infrastructures like China's.
The Internet block in Egypt was lifted Wednesday, Feb. 2, but OECD estimates the daily loss to businesses at about $18 million. Telecommunications and Internet services account for between 3 percent and 4 percent of Egypt's GDP, according to a spokesperson for the OECD.
The spokesperson said one thing that struck organization officials about this outage has been its global impact. The Internet outage in Egypt affected customer service calls in New Zealand for mobile phone operator Vodafone, for example. He explains that Vodafone has a call center in Egypt with 180 staff that was unreachable when the Internet stayed down. They had to hire 100 new workers in New Zealand to handle their usual call volume.
The OECD warns that the long-term impact of the service disruption could become greater because the Egyptian government had cut off domestic and international high-tech firms that provide services globally, making it more difficult in the future to attract foreign companies and assure the network would remain a reliable business tool.
There had been workarounds -- not for email and business communications, but to disseminate information from within the country to those on the outside about the protests and unrest. Engineers from Twitter, along with Google and its newly acquired social company, SayNow, built a service that launched Monday. The speak-to-tweet service lets people post Twitter messages via a landline phone. Messages are tweeted using #egypt by leaving a voicemail on a Google-supplied international phone number.
Would your company be willing to spend the money to build a workaround in China? What does your redundant back-up plan look like? And are you ready for manufacturing and shipping prices to rise?