We’ve all been sold on the notion of globalization for the last decade, and for good reason. Here at GAP we just recently launched our B.R.I.C. services to satisfy the global demand for information. China is the world’s most populous country and fastest growing of all the G-20 economies. Thus, operating in China is essential to any company that wants to operate globally, especially those based in America. This is what I have been led to believe. Yet, Google Inc., arguably America’s most respected company, is threatening to end its Chinese operations. The search engine giant has apparently had enough of China’s extensive censorship and is claiming that the Chinese government hacked into Gmail accounts belonging to a number of human rights activist.
While Google is a great company and much admired here at GAP, the first question I had to ask myself was whether or not this was a tactical statement. Could Google really leave China without a knee-jerk reaction by its stock-holders? The answer appears to be, so far, yes. China, even though it has the most internet users in the world, only accounts for 1% of Google’s revenue. The day Google made the announcement, 1/12/09, its shares traded for only 2% lower at the end of the trading day. Two days later, on 1/14/09 the company’s stock closed 5 points higher than what it opened for on 1/13/09. Either stockholders do not think Google will bolt, or they do not think it will matter. Only time will tell.
One reason Google wants to leave might be because it is losing the battle for market share in China. China’s own state run search engine Baidu currently owns a 62% share of the market compared to Google’s 30%. Controlling a third of the largest market in the world seems relatively successful, but not so much when you compare it to the 68% share it controls in the U.S. I do not think Google considers itself second best at anything, and undoubtedly they believe that the censorship is the cause. It only seems obvious that the Chinese people would prefer to use a Chinese search engine, particularly, one that is state run such as Baidu. It is this fact that I believe to be the most influential to Google.
When Google launched its Chinese search engine, Google.cn, in 2006, they had no problem with China’s censorship policies and were willing to adhere to their view of propaganda discipline. At the request of the Communist Party of China, Google even agreed to censor information about the 1989 Tiananmen Square protests along with information from countless human rights groups and dissenters. Google agreed to all of China’s terms while operating under their motto of “Don’t Be Evil.” For Google.cn, however, the motto seemed to be “Search No Evil.”
Free speech and human rights activist are heralding the news as a victory for their respective causes, and there is no doubt that Google is taking all the credit. In fact, we should all applaud any champion of free speech, but Google.cn has been the exact opposite of that for several years now. If we read between the lines, it becomes clear that Google is like many of the companies around the world. They keep quiet and turn a blind eye to human rights violations as long as there is money to be made. There has not been a lot of money in China for Google, and now they can no longer stand the tyranny of the Chinese government. Coincidence? I can’t say for certain.
Whatever Google’s motivation is for leaving China, one thing is for sure, it takes powerful organizations to tear down obstacles like the ones the Chinese people face. I believe it is possible that Google can actually do more for the people of China by bolting than if they continued to conform. Watching Google strive to become acceptable to the Chinese government, especially during the 2008 Olympics, was like watching an older sibling impose their will on their younger counter-part. This is not meant to insult the company, but it is simply how Beijing works. They do not take kindly to any highly publicized, theatrical throwing down of the gauntlet. In fact, just like in Tiananmen Square, they tend to squash their foes before you even hear about them. Facebook and Twitter are banned in China, and does anyone remember a public showdown between them and Beijing? It is far more likely that Beijing will ban the company before Google pulls out.
American’s love Google and the Chinese people made it obvious that they support Google by going to the company’s Chinese headquarters last week and leaving flowers, lit candles, and signs of encouragement. The impact of Google on this generation is incalculable, but do you believe Google is as heroic as the news is leading you to believe? Or do you think they are simply avoiding the losses and hassles they would incur by staying? They did not stand up courageously in the beginning when they thought there was money to be made. Now, however, Google is willing to stand up for itself, and hopefully, the Chinese people will also have the courage to do the same. As the old saying goes, “Better late than never,” but I can not help wondering if its courage on Google’s part or is it cowardice.
Regardless of their motivations or tardiness, one thing is certain, it feels good the have Google fighting for the good guys. I have always considered Google to be one of the corporate good guys, especially in an environment consisting of Madoffs, Enrons, bailouts, and bonuses. We will have to wait to see how everything plays out in the coming weeks or months, but rest assured readers, GAP is in China, GAP is staying in China, and GAP will continue to provide the most accurate, uncensored market intelligence from China.
