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Google vs. China — Who's Got the Most To Lose?
Barence writes "Google looks set to pull out of China, but who will suffer most? The search engine or China? At last week's South by Southwest conference, Kaiser Kuo, a former director of digital strategy for the Ogilvy & Mather advertising agency in China, gave an illuminating talk that examined the history of Google and other Western internet firms in China, their relationship with the Chinese Communist Party (CCP), and the likely outcomes of the current stalemate. Kuo explained that Google had earned the respect of the tech-savvy urban elite by protecting users, making censorship clear and by protecting its employees in China. That means Google is walking away from a 35% market share, which contains a far wealthier demographic than local provider Baidu. The Government, meanwhile, which has been very pro-competition, is about to hand a complete monopoly to Baidu, harm its international standing and the development of net technologies in the country. Is it a lose-lose situation?"
The number that was being thrown around in the last thread was around half of that.
Google has the most to lose because they are a company and China is a country.
Google will make its profit, but not as much as if it would have if it stayed in China.
China will make itself whatever its government wants it to become where Google is around or not.
I don't know...
the Chinese people.
Google loses, Baidu wins, and China doesn't give a damn either way. All those Google China employees will likely just move their skills over to Baidu (assuming they were locals to begin with and probably many of the ex-pats as well) and take what they know with them when they do. Baidu gets an automatic monopoly, no matter what Google's current market share, and China, or specifically the CCP doesn't care because they still get what they want- the look of being the caring provider that "supports competition" while still controlling the flow of data.
"Growing old is inevitable; growing up is optional."
I mean, without China, there's only 5.5 billion people left in the world to cater to. How can they possibly get by on such meager numbers?
accept for that whole "hacking" thing.
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Yes, Google has to respect Chinese law if it wants to do business in China. As a result, it has decided not to do business in China. (Well, there are almost certainly other significant reasons as well, but the censorship laws are part of the reason).
Does a line appended to your comment give your post meaning in and of itself, or only in relation to those without?
Microsoft is waiting with Bling.
FTFY
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Tough business call. If Google knuckles under to keep their market presence in China then they sacrifice a great deal of the good will and karma they've earned through the "Don't be evil" policy.
Refusing to continue to censor in China will clearly be a short-term loss for Google as it's pretty obvious the Chinese government has zero tolerance for any kind of non-compliance. (Heck, their only way to handle any kind of non-compliance is to imprison and Disappear their own citizens, ex-pulse foreigners and fine or refuse business with foreign corporations.)
However, I argue that if Google holds its ground and swallows the short term loss they will win long term. I fully expect Google and democracy as a whole to outlive Communist China.
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It's not about business as much as it is about censorship. What you are forgetting is that the current group of Chinese students don't even know what tank man is, never mind what was happening in their own country when he stood in front of the tanks. Everyone seems to agree that Saddam Husein needed to be taken out because he was a bad man. The Chinese government is a bad government and everyone is politically dancing around this fact while trying to make money in China. Google is saying "hey, we have a motto and doing business with such a government is not in keeping with it". No matter who wins or loses, this stands to be a surrealistic highlight of the fact that there are bad people in the world, and the world is too small to allow them to corrupt such a large part of the world with censorship, secret police, and many other unsavory things. The mere existence of the Chinese government and who they will be supportive of creates a safe environment for more of the same to blossom in different places. It's not like the red scare or anything, but if they don't want to do business with anyone who will not also partake in ill treatment of their citizens, the world really needs to step up as a group and say NO, you're wrong and we won't play. That means that we should stop buying things made in China. period. If Google can say no, the rest of us should be saying no. If you want cheap goods, try another country of origin, just don't buy 'made in China' goods. Besides, your pets and children may live longer if you don't.
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Google is a business, like any other. Do you think that they haven't run a CBA on this move? While the Chinese population is large, the viable market for Google's products is not. How many people in China have regular internet access? How many of those have disposable income to spend on things they see in advertisements? How many Chinese companies that market locally are going to have their profitability affected by search engine advertisements? On the other hand, how much does it cost Google to protect against cyber-attacks from the government? How much does it cost them to lose their trade secrets and IP? How much does it cost them in goodwill elsewhere to remain in business in China, following those draconian laws?
Google is coming out ahead in this move; that's why they made it in the first place. The Chinese government comes out ahead as well, since they gain even greater control over the flow of information within their borders. The only ones who lose are the Chinese people.
How come whenever it comes to win/lose with business the only factor really looked at is bottom line profit? If I'm reading the entire situation correctly Google is set to win, big, on this decision. Sure they'll be collecting less profit from a major country in the world economics but they save on a number of levels often ignored:
1) They've already faced legal battles regarding the security of their accounts and information. Fighting court battles isn't cheap and the press related to "Google accounts hacked" doesn't bode well for them anyway.
2) Stepping back from a country who has values different from the majority of Google's "customers" will save it from requiring a highly diverse business plan when not necessary. I'm sure its not cheap to run an entirely separate company from their own in China.
I'm certain there's more but there's a little summary, feel free to add your own. Essentially I feel Google wins, sure, they don't have a higher bottom end profit but if they are still in the black at the end of it all then they've bought themselves enough time to re-evaluate their Chinese venture or anything else for that matter.
The great thing is that China has based their entire argument on the fact that 'Google must obey the law,' and if they don't, they are not upholding the harmony of the country. Now Google has found a solution that is 100% legal.
Never underestimate the power of propaganda, especially from an entity that owns the media. China doesn't care how Google is bypassing the law, and will still spin this as being illegal.
That means that we should stop buying things made in China. period.
Have you actually been able to do this? Even if I shared your opinion, I doubt a China boycott is feasible.
China isn't where I'd like them to be, either, but take a step back and compare the China of 30 years ago to the China of today. They have undergone a remarkable change in a very short amount of time. There is more to come.
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RTFA. That's exactly what they're doing.
www.google.cn now redirects to www.google.com.hk - a site that is not affected by Chinese censorship, and is in the same language.
Ethical investing is a niche market. We in America value the almighty dollar above all else, and not without reason. So if some dastardly company were to now sell out and take the Chinese money and make a bundle, they will be rewarded with higher stock prices. Corporate bonuses will rise. That's all that matters, right?
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