Google China Case Analysis

Case Study: Google in China

Google issued a statement mentioning the attacks across the Internet generated from China and declaring its unwillingness to censor search results any more and indicating its decision of exiting China. Several months later, the company moved from Beijing to Hong Kong, out of Mainland China, and still has provided services to users in Mainland China, but also has faced many difficulties. This case is very typical and meaningful for foreign companies, which have willingness to launch their business successfully in China. Culture, local laws and differences between western market and Chinese market should be taken into consideration.

Case A

1. Why did Google issue the statement of January 12?

Google issued the statement to express the company's unwillingness to tolerate censorship in China and the decision to exit from China. The Chinese government made the decision to control the information flow on the Internet and insisted on removing information from search results that it is considered politically objectionable, which leads to the insufficiency and inaccuracy of the search result. This is not what Google wants. The statement doesn't aim at accusing of the cyber attacks across the Internet and helping users make their computers much safer, but declare that Google won't compromise to the censorship in China any more, which violates the missions and principles of the company--To organize the world's information and make it universally accessible and useful and do no evil.

2. Can Google take comfort from the reactions of stakeholders so far?

In my opinion, it depends on different stakeholders. For competitors, such as Baidu, there is no doubt that Google exiting from China is great news by getting rid of such a strong competitor. And also I don't think the shareholders of the company were happy to see that, as the stock price of Google falling as low as $573.09 on January 13 comparing to $714.87 in December 2007. And cutting themselves off from one of the fastest-growing economies in the world and giving up such a huge market would lead to negative impact to the revenues of the company. Those shareholders would give extra pressure. However, the statement won some respect and support from democrats and human rights activists, and also won the trust of its users and the employees outside China, not the ones in China.

3. Do you expect Google to exit China?

As a Chinese user, if you ask me this question, I will tell you that of course, I don't expect Google to exit China. Such a powerful search engine with its other products will benefit its users with no doubt. But based on the long-term strategy, no matter for the principles or the profit or the development of the company, Google should exit China.

Chinese market is very special, differing a lot from western market in many aspects, such as its political policies or culture or tradition or latent rules. The strategies of many foreign companies, which are generally feasible around the world, are unsuitable for the market of China. Without the support of the government, I think Google will be in a disadvantageous position in Chinese market.

Case B

4. How would you characterize Google's latest move?

The latest move of Google sufficiently indicates that Google still values the market of mainland China very much and keeps trying to find a better way to develop its business in mainland China. This is one compromised step but very smart, since it won't be in conflict with the Chinese government directly and can still deliver its services to users in mainland China. Though there are still limits and difficulties for Google expanding its market in mainland China.

5. Do