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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?"
Google loses, China's reputation will recover after a blip, and Microsoft is waiting with Bing.
Not even a link to a story yet, but the ticker on the BBC News home page is reporting that Google has announced that it has stopped censoring its search engine in China. Since China has already made her position clear on this eventuality I suppose this must mean that Google believes that it might as well be hanged for a wolf, than a lamb.
I'm nipping out for some popcorn; the next couple of days are going to be really interesting...
UNIX? They're not even circumcised! Savages!
There's a small part of me that would like to see other companies follow in the footsteps of Google. Get out of China. Just leave.
Why?
This is a poor example but I can't help using it. Remember South Africa? There was a time when quite a number of companies just didn't do business there given how that government was (not) working for it's people. I'd like to think this helped change things for the better in South Africa.
It's not that I want to force my idea / style of government onto the people of China, but .. well .. besides North Korea and Cuba are there any other communistic states left? Would any people as a whole choose to convert to a communistic system. I'm thinking no.
And in a way, walking away from China as a whole, send a bit of a wake up call to the Chinese that, "O by the way, we care about how people are treated. We care about freedom." They need to too. When people in a place such as China can see how things are elsewhere in the world, it can and should plant the seed for change for the better for China. Probably overly optimistic on my part but hey, it's something.
Great grand internet firewalls need to go. Speech needs to be free.
North American companies have a pretty easy ride on their own turf. When they expand overseas they tend to fail basic due diligance and continue doing whatever they like. When they're warned they're breaking the laws of the land, they'll arrogantly continue doing what ever they please. Occasionally, they'll get bitch slapped, but mostly receive a nominal fine. China are a little fussier than most countries, and google have just found out the hard way.
Or, Google keeps a Chinese language site, without any filtering. Let them look like asses for blocking it with their firewall that for some reason, they keep denying exists. Even keep the country code domain, until they force you to leave. That sounds like one hell of a trade dispute with a country that NEEDS a "favored nation" status with us. I still don't understand why google doesn't just remove themselves from the country, but still have a presence easily reached by Chinese citizens. (kind of like gambling sites, that are illegal for US citizens, which is against treaties, and we got a multi-billion judgement against us for)
What are we going to do tonight Brain?
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.
Of course Google also gets to look like the good guy... Tried to stand up for freedom and was smacked down by the mean ol' Chinese government... May actually get them some new customers that they might not have had before. At the very least all this press is good advertising.
You're probably right... They're losing access to a huge market... But it's still possible that Google will wind up doing pretty well after all this. Sure, they'll lose some income... But how much were they spending (not just in money) to keep things up and running in China? Obviously Google thinks the cost outweighs the benefit.
China will make itself whatever its government wants it to become where Google is around or not.
You seem to think that a government can miraculously transform itself into anything it wants, and automatically be successful. That is not true.
Sure, the Chinese government is pretty damn stable. It is unlikely to topple because of this Google thing. And they'll release plenty of propaganda that will likely make them look even better in the eyes of the Chinese public...
But this has to hurt their international image. They're so repressive that Google couldn't even do business with them. I'm sure plenty of other companies will think twice before opening offices in China.
There are probably plenty of citizens who've gotten used to Google, and will feel its absence as well. Not to mention the folks who were employed by Google.
I don't honestly believe that any of that will amount to a whole hell of a lot... Google's just a search engine, I doubt if they'll have that much of an impact... But there will be an impact. Both within China and without.
"Work is the curse of the drinking classes." -Oscar Wilde
And say China loses. Why? China needs the US more than the US needs China. If China pulled out their investments, it would drop the value of the US dollar, which could have the effect of jumpstarting the stagnant US economy by making it suddenly a lot cheaper to relocate jobs into the US (much like how it is with China and their practice of artificially suppressing the value of their currency by 40-50% and gaming the free trade deals with monetary policy). On the other hand, China really, really needs the US market as a result of focusing so heavily on doing business here. Too many companies are set up entirely to deliver services to the US. You pull out the rug on that, those businesses fail and China is stuck scrambling to find some other country as wealthy as the US willing to go into debt with China...which isn't exactly likely. China's investments in the US wouldn't be worth nearly as much as they paid in for. American companies could buy those investments back at a price lower than they were originally sold off for.
What does that have to do with Google? When China's government decides that it can interfere in the practices and control of a private company's product, especially a worldwide recognizable one like Google, which has been operating legitimately within all trade treaties, and even go so far as to hack the systems of a foreign corporation, it brings the whole world's attention back to China...especially the US. It gives the US government more political capital and support to go after the monetary practices that China has used to vault itself to a world economic superpower. Considering the current financial situation in the US, it really has a lot less to lose than China and a whole lot more to gain, despite the debt that the US owes. China's best policy is to operate quietly and keep building wealth and remain inconspicuous...reminding the world every couple years that you're basically a dictatorship that brutally suppresses dissent (and while the US has had some glaring examples of doing similar acts, you can't sanely argue that the US is anywhere near as excessively repressive as China has been over the years) isn't exactly the best way to stay inconspicuous and make countries want to sign more trade treaties with you. It probably gives those other countries' leaders a lot of political capital to consider restructuring those existing treaties. It's a lot easier to gin up the citizens against a country that openly violates the privacy of your country's corporations than it is a country that plays fair. If a country plays fair, corporations that do business with those companies can easily lobby enough support to squash even the basic intent of trade policy reform.
Google wins. They have convinced us that they "don't do evil", so we keep using their products and services and feel good about it. And they get positive publicity. Google was not the #1 search engine in china anyway. Chinese people can still use google.com. Maybe.
Short-term, Google probably has more to lose (although, arguably, they also have more to *gain* by cutting ties with China; it certainly isn't going to do their reputation in the West any harm).
In the long term, however, I think China has more to lose.
Google is not the first company to decide doing business in China is More Trouble Than It's Worth. As it stands, a lot of people deal with China not because they're a pleasure to do business with, but because it "seems important", because China's so big. That's not a good basis for a solid relationship. If they continue doing just about everything they can think of to alienate people, China may eventually find themselves screaming "we're important, come do business with us" to a world that has lost the willingness to put up with their nonsense.
Cut that out, or I will ship you to Norilsk in a box.