For a sec...
I thought the article was going to relate to VPN banning/blocking running off a major company. But, how great is the reality that foreign companies relying upon VPNs may pack up and leave?
IF (and that is just an if) foreign companies leave a here and there, what is the likely business model pain they will feel? Did many of them have to turn over to locals some 51% of the venture/entity in order to be allowed to "play" in the country? If so, then it seems to me that blocking VPNs would be an interesting way to take overe "abandoned" companies.
But, the article is about GoogoRola's inability to compete.
In August, in Shanghai, I was looking at a brand of local Android phone. It began with a C, IIRC, and it was in one of the major e-box stores, a local version of Best Buy (which probably spelt doom for the long-vacant Best Buy building a few blocks away), selling all sorts of electronics plus refrigerators, portable air conditioners, heaters, washers, dryers, and such. Anyway, at the time, someone local told me not to consider buying the Chinese version of the phone (it was rather nice-looking, but cost only some US $100) since it reportedly had main board or circuitry problems. And, it would not work in the US if I decided to try to use it there. And, that it might try to phone home, no matter where I connected it to a network. That was dissuasive/persuasive enough.
With these apps being knocked off and shamelessly even keeping the headers or dev memos, it will be just a matter of time before the local devs reverse engineer, improve upon, and make it extremely difficult for just about ANYone with a profit motive from planting a flag there. If the music apps are already upping in quality, then so long to so many other types of apps.
As for domestic security, this probably plays very well into the hands of the departments that want clean, smooth access into apps and devices.