"Either have employees in-country so we can intimidate them so you'll do what we want, or we block your service."
Sounds pretty effective? Sure, some people will get around the blocks, but it'll be a relatively small percentage (especially if the government makes circumventing these blocks illegal, most people won't find it worth any risk to do it anyway), and your service will be effectively destroyed in that country.
"Either have employees in-country so we can intimidate them so you'll do what we want, or we block your service."
Sounds pretty effective? Sure, some people will get around the blocks, but it'll be a relatively small percentage (especially if the government makes circumventing these blocks illegal, most people won't find it worth any risk to do it anyway), and your service will be effectively destroyed in that country.