The into China and capture their large market

The auspicious beginningof Google began in the mid 90’s as a college research project by Stanfordgraduate students, Larry Page and Sergey Brin. (Google) This innovativetechnology obtained search query results through a quick analysis of webpages. Googlehas since grown tremendously with the multitude of products and services itoffers today. Google’s mission statement is “to organize the world’sinformation and make it universally accessible and useful.” (Google) WhileGoogle began in the U.S., they have expanded into many other countries.

Googlehas offered fast and efficient service and continually works towards dignifyingthe core message of their code of conduct; “being a Googler means holdingyourself to the highest possible standard of ethical business conduct.”(Google) During the early 2000’s Google attempted to expand into China andcapture their large market of internet users. (Thompson 2006) It was an easydecision for Google to enter the Chinese market. China offered a stable economyand a sizable population that included many consumers adopting new technologyincluding the Internet. Despite the murky water brought about by censorshiprequirements, Google jumped into the Chinese market and encountered manychallenges along the way.

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Before1978, China was isolated under Mao Zedong’s leadership. (Li 1997) The countrysaw slow growth and its people lived in poverty. After Zedong’s death, DengXiaoping led the People’s Republic of China into economic growth. (Robinson2017) Xiaoping foresaw the path to economic recovery was by allowing foreignand new technologies into China. Chinese leader Deng Xiaoping worked to mediatethe backward ways of previous leadership by establishing an Open Door Policy. Theeconomic reform policies provided tax incentives attractive to foreigncompanies. The success of the open door policy included additional foreigninvestment to China. (Li 1997) The average GDP annual growth rate for China was9.

5% from 1980-90; making China one of the fastest growing economies. Duringthat time, the rest of the world showed a corresponding growth rate of only 3.1%.(Wei 1995) In the early 21st century, China joined the WTO. (Li1997) China was experiencing a booming economy and more Chinese people wereusing technology. As China became wealthier, more computers and internetservices were purchased.

China was very attractive for investment as theyoffered production capabilities coupled with lower costs. Chinese internet usermarket penetration grew just over 8% during the six year period between 2000and 2006. During the next six year period, the market penetration grewtremendously to 42.3%. (China Internet Users)Thecultural values for eastern countries differ greatly from the cultural valuesof western countries. Eastern countries tend to be more conservative andtraditional, like China; while western countries tend to be more liberal, likethe United States. Unlike in the U.

S., Chinese citizens do not inherentlypossess freedom of speech rights. Google, as an American born country,understood the U.S.

marketplace well. However, Google’s approach towardsChinese expansion did not take these cultural differences into consideration. Googlewas not the first Internet company to enter the Chinese market.

Yahoo was apioneer in China, opening an office in Beijing in 1999. (Thompson 2006) Yahooquickly found the cultural differences difficult to navigate. For example,Chinese businesspeople prefer live exchanges to email. “The most popularfeature of the Internet for Chinese users is the online discussion board.

“(Thompson 2006) These cultural nuances caused Chinese users to flock to sitesdesigned by Chinese entrepreneurs, as the American run sites didn’t include thefeatures desired by the Chinese market. Baidu was introduced to the Chinesemarket in 2001, and made stiff competition to Yahoo. (Wilkins 2009) Baidu, aChinese search engine, built a tool into their site that allowed the creationof discussion groups based on searches. “Baidu’s chat rooms receive as many asfive million posts a day.” (Thompson 2006) Baidu’s insider knowledge into thewants and needs of the Chinese market positioned them for success.Googleattempted to learn from the mistakes of Yahoo and took a different approach toexpanding into China. In the early 2000’s Google engineers began creating aversion of the Google search engine that could understand Asian based languageslike Chinese. (Thompson 2006) By 2001, Chinese users who navigated togoogle.

com would be routed to a Chinese-language interface. After only a year,Google had amassed approximately 25% of the Chinese search traffic, achieving alevel of success superior to Yahoo. (Thompson 2006) While 25% market share isimpressive, Google’s main Chinese competition, Baidu, had amassed nearly halfof the Chinese market.

(Thompson 2006) Brin and Page’s reasoning for expandingGoogle into China speaks back to the Google mission statement: “to organize theworld’s information and make it universally accessible and useful.” (Google)Google realized that they would have to cooperate with the Chinese governmentand censor politically sensitive web sites like those featuring religion,democracy and pornography. Brin himself was quoted as saying, going into China”wasn’t as much a business decision as a decision about getting peopleinformation. And we decided in the end that we should make this compromise.”(Thompson 2006)Chinauses two methods for web censoring. For any companies located inside China’sborders, the government uses a multitude of threats to ensure clean content isdisplayed on the Web. For any sites that are location based outside of China’sborders, the Chinese government utilizes a tool commonly referred as “The GreatFirewall of China”.

(Wilson) The internet is a vast network of undergroundcables. When surfing the internet in China, an internet browser will send out arequest when you attempt to navigate to a webpage. The request will travelthrough these underground cables and when it reaches the routers at the border,is examined. If the request corresponds with a site on the government’sblacklist, the site will be blocked. If the request isn’t already on theblacklist, it will be scanned for content. The router will determine if thesite will be blocked or allowed through. Obeying Chinese censorship lawsrequired the company to purge Google search results of any websites notapproved by the Chinese government.

Banned sites and searches included thosepromoting free speech or pornography. A Google search of free speech in theUnited States provides 101,000,000 search results. The same search on google.

cnwould yield very different results. Most pages, Google has erased completely. The Chinese government does not make any qualms about itscensorship. “Some 50,000 Chinese authorities do nothing but monitor traffic onthe internet.” (Anderson 2005) China’s Ministry of Public Services introducedthe Golden Shield project in early 2000. (Wilson) This technology acted as afirewall to control the information available to Chinese citizens. Two Internetpolice mascots were created by the Shenzhen Public Security Bureau named”Jingjing” and “Chacha”.

These mascots include a blog and a chat window whereusers can talk with them. (Thompson 2006) The Beijing Youth Daily reported aShenzhen officials comment that “the main function of Jingjing and Chacha is tointimidate”. (Qiang 2006) Intimidation seems to be a main tactic used to ensureInternet companies follow censorship rules. “Since 2002, internet serviceproviders in China have had to sign pledges to monitor and censor traffic ontheir networks before they can operate.” (Anderson 2005) Noncompliancewith censorship regulations can include stiff punishment. Fines or jail timecan be imposed, while web-sites risk being shut down or blocked. (Wilkins 2009)These penalties have resulted in likely more censorship than is needed.Requiring that each private company self-censors, eliminates the unobtainabletask of the government formally monitoring the sizable internet content that iscirculated on a daily basis.

Each company is left to determine what content isacceptable. While occasionally, the government will send demands of websites tobe taken down due to violation of their censorship guidelines.OnSeptember 3, 2002 Google vanished from Chinese servers.

(Thompson 2006) Anyuser that attempted to access Google that day simply received an error message.The Google site had become blocked by the Chinese government. Google neverbecome completely aware of the reasoning for the block of their site.

However,two weeks after the blackout, their website became unblocked. (Thompson 2006)Google still experienced difficulty operating in China. Due to the GreatFirewall, China web traffic speeds from outside China’s borders can be slow.Google, even after being unblocked, was often available due to data jams. Afterthe website blackout, Google search queries for censored sites would oftencause the Google site itself to shutdown, thereby causing frustration by customers.Google and other search engines work on the premise of delivering searchresults quickly.

These search delays and issues caused many Google customers toflock to Baidu and other competitors. (Thompson 2006) Google’s competitorBaidu, did not experience many of these issues due to their servers werelocated in China and not subject to the Great Firewall. Google’stiming to enter the Chinese market was unfortunate. The political environmentfor tech and internet firms had been soured. It was revealed by ReportersWithout Borders that in 2004 Yahoo provided a user’s personal email accountinformation to the Chinese government. (Thompson 2006) This particular userleaked a document detailing government press restrictions to a pro-democracyweb site through his Yahoo account.

A ten year prison sentence was the penaltyimposed by the Chinese government. Microsoft also honored a government requestto delete the writing of a free-speech blogger, Zhao Jing. (Thompson 2006)During Congressional hearings, Google was asked how a company with the slogan,”Don’t Be Evil” could cooperate with Chinese censorship restrictions.

Googlefelt that under the circumstances, with the unethical dealings of both Yahooand Microsoft, they were portraying a much more ethical and responsible front.              Google executivesnow needed to determine which compromises they would be willing to make tocontinue Chinese operations. They decided that unlike their Yahoo and Microsoftcounterparts, they would decline to offer email or blog services.  Google decided that the most ethical solution ofoffering some services to the China market, even restricted by Chinesecensorship, was better than leaving the Chinese people with limited informationaccess. (Waddell 2016) Brin’s solution to Chinese censorship included adding adisclaimer to the top of search results.

He said, “they can notice what’smissing, or at least notice the local control.” (Thompson 2006) Google’s effortto notify their customers in advance about the censorship, spoke to theircommitment to high ethical standards. Google executives decided that they wouldoffer two Chinese search engines. The first being the original,uncensored and slowed by the Great Firewall. The second site being google.

cn,which would include self-censorship by Google, thereby offering the quicksearch results Google customers navigate to their site for. Google hired Kai-FuLee to head up (Wilson) Lee is extremely accomplished and well knownin the China region, and this addition to the Google team speaks to Google’s persistenceto succeed amidst the censorship controversy.

Google struck a deal with thePeople’s Republic of China and launched in 2006. (Wilson) Google’s move into China required them to register asan official Internet Service Provider (ISP). Chinese ISP’s are required toself-censor content that is classified illegal by the Chinese Communistgovernment. Censored content included certain political, religious and socialsubjects banned by the government. As there was no master list of sites thatrequired blocking, Google created their own blacklist.

They set up a computerinside Chinese firewall and programming the computer to visit Web sites. Any sitesthat were blocked by the firewall were added to Google’s blacklist. In December2005, Google signed a license to become a Chinese Internet Service. (Thompson2006) Google’sdecision to operate in China did not sit well with U.S.

officials. “Company executiveswere called into Congressional hearings and compared to Nazi collaborators.”(Thompson 2006) Protestors gathered outside the company’s headquarters inMountain View, California and the company’s stock price fell.

Google was notalone in expanding into the Chinese market. However, Google claimed to bedifferent than other companies. Brin and Page wrote, in Google’s officialSecurities and Exchange Commission filing, that Google is “a company that istrustworthy and interested in the public good.” (Thompson 2006) U.

S. protestorsperceived the situation as difficult for the company’s young founders to standup that message of honoring public good while pacifying the Communist Party andthe Chinese regime fueled by repression. Google shareholders voted against ananti-censorship proposal in May of 2007. (Wilson) Google asked thatshareholders vote against the bill. Google’s Senior Vice President forCorporate Development, David Drummond said, “Pulling out of China, shuttingdown google.

cn, is just not the right thing to do at this point, but that’sexactly what this proposal would do.” (Wilson)Oneof Google’s options in continuing to navigate the China marketplace includedcomplying with the current Chinese requirements and regulations. By complyingwith current Chinese regulations, Google might have hoped that the future wouldbring changes to censorship requirements. Also, as for Google’s bottom line,staying in China and complying with censorship guidelines, allows them toprofit from one of the fastest growing world internet markets. If Google wasserious about wanting to have a Chinese presence, they needed to be willing toabide by local rules and regulations.  Byremaining in China and abiding by censorship requirements, over time Googlecould have gained the trust of the foreign Chinese government. This trust wouldwork to increase the likelihood of influencing change in the future.Unfortunately, simply complying with the censorship requirements of the Chinesegovernment, would continue to earn them unpopularity with the democratic UnitedStates.

For Google to continue to run their Chinese version of their site inthe U.S., they would continue to receive firewall slowdowns and effectivelycontinually lose market share to Baidu or other competing search engines.Google could choose to open a Chinese office and move its servers to Chinesesoil. This approach would mitigate the Great Firewall issue, and service speedswould improve.

However, now Google would be subject to the self-censorship lawsthat apply to Chinese businesses. Brin and Page’s had the option resistingChinese censorship regulations completely. This option would have shownGoogle’s stance against the repressive censorship policies of the Chinesegovernment. Most of the criticism Google faced back on American soil, would beeliminated by taking a stance towards resisting the privacy and censorshiprequirements.

Google likely would have also received press coverage on theirdecision to stay and resist censorship. This press coverage Google could haveused in their favor in the fight against these injustices. Another option thatGoogle executives could have gone with would be ceasing Chinese operationscompletely. This option appears to inflict the most harm.

Withdrawing without afight would allow the Chinese government to continue their censorship policieswithout resistance. China’s internet market is more than $300 million,encompassing 300 million users and 670 million mobile users. (Heskett 2006) In addition,withdrawing from the Chinese market, provides Baidu with a straight shottowards a Chinese internet market monopoly. They are already a dominant searchcompany in Japan. (Fannin 2010) A fourth possible strategy is for Google totransfer their business dealings to a local company who better understands themarket and government regulations. Yahoo used this strategy successfully ingiving control to Alibaba.

(Thompson 2006) A local company would likely be wellversed in the ins and outs of Chinese business. Opting this route, however,Google would have to be willing to let go of some control and allow an outsiderto make business decisions. OfGoogle’s options, they choose the resist and stay approach.

This approachfailed. The Google site, during the time it was live, experienced slow serviceand security breaches. Google’s frustration led to them stopping censoringaltogether. It was shortly thereafter that the Chinese government shut downGoogle altogether. Google choose to leave and subsequently redirected traffic to their uncensored Hong Kong site

hk. Unfortunately,China is not the only country where Google services are blocked.  “Googleproducts — from search and Blogger to YouTube and Google Docs — have beenblocked in 25 of the 100 countries where we offer our services,” Googlewrites. (Siegler 2010) Google had many options when considering their entry inthe China market.

However, as they approached the situation blind and operatedwithout much of a strategy, they encountered many issues along the way. A NewAmerica Internet-privacy advocate, Rebecca MacKinnon, says that “companiesshould start thinking about how they will deal with free-speech issues beforethey start doing business in a repressive state.” (Waddell 2016)Censorshipoccurs over the entire globe. Google’s downfall began with their failure tounderstand Chinese culture. Google attempted to defy Chinese censorshipguidelines and in turn their users received slow services, which caused lostmarket share in a country with the largest amount of web users in the world.

Google’sdecision to do business in China was not an immoral act. While their primarymotivation was likely to take advantage of a booming economy, they proved theywere not willing to do anything solely for profit sake. Google did initiallysign a pledge to monitor and censor internet traffic that went against theirdemocratic values. However, they attempted to mediate this decision byresisting Chinese censorship guidelines after the fact. Google’s move intoChina while benefiting Google, did also create jobs and provide millions withinternet access.

Google’s jump into China also worked to prevent Baidu frommonopolizing the Chinese market. I believe Google’s decision to resistcensorship restrictions while attempting to remain in China was the most moraldecision they could have made at the time. Simply complying with privacy andcensorship would have conveyed the wrong message to Google’s shareholders.

While ceasing business altogether also allows the Communist regime to continuetheir censoring ways. A partnership between Google and China could befavorable. Google is known as one of the best at providing internet technologywhile China has the largest demand for internet technology than anywhere elsein the world. For Google to succeed in China, they will have to be willing tocontradict some of their core values and censor their website. These politicaldifferences will likely include rocky roads to any future partnership. CurrentlyGoogle does not have a website in China. A solution for Google to remain inChina while staying committed to their high ethical standards was not found.However, Kaveh Waddell, reporter for the Atlantic writes that as of 2016 “Googleis hiring for dozensof positions there as it prepares its reentry.

” (Waddell2016) For Google’s second approach to entering the Chinese market, hopefullythey have learned from prior mistakes and have a strategy for navigating thegovernment censorship guidelines. A successful move into China will allowGoogle to make a presence, build trust with the Chinese government andhopefully influence future changes, while profiting from one of the largestinternet marketplaces in the world.


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