It has been almost 30 years since China opened its doors to foreign investment back in 1978; while the overall business environment in China experienced rapid updates in the endeavour to catch up to western standard, policy makers in China can still challenge western notion of fair business, and uncompromisingly pressure foreign operation to modify itself to fit local regulations. This reflective piece will demonstrate firstly – through case study analysis of Google – how difficult it might be for an information technology company to remain a competitor in the Chinese market; then explore the relationship between culture and politics, and how with increasing western presence in the Chinese business scene might help influence business culture and eventually the political climate in China.
In 2001 China joined the World Trade Organisation (WTO) with the promise to make its market more accessible to foreign investments. While China has deregulated and lowered barriers to entry over the years in the overall sectors, there are a few sectors China is slow to relinquish control of – such as the political sensitive information technology sector that provides free flow of information to the Chinese citizens. Google is one company in the direct fire of Chinese policymakers making a political statement to the world: that multinationals operating in China must follow Chinese business guidelines even at the risk of contradicting with the western norm.
The launch of google.cn in early 2006 provoked major media outcry as it complied with Chinese government’s demand for censorship by blocking political sensitive information from the search engine for its Chinese users. Human rights group reprimanded Google for violation of free speech, and the general public questioned Google for no longer positioning itself as the ‘opinion neutral’ internet search engine provider (Brenkert, 2007). It seems too easy to condemn Google for compromising than to consider the situation from a business perspective: was Google ever given a position to negotiate the censorship policy in the first place? The answer is no. Chinese authorities made it clear that censorship, or the ‘Great Firewall’ in China applies to all internet search engines, foreign or local. The only options available for Google are to give up the world’s second largest internet market – a massive 111 million active online users (TimesOnline, 2006); or to stay, but compromise to local conditions.
Strategic wise it would have been unwise for Google to throw away a major market for human rights issue, especially considering market share to be the most pertinent indicator for attracting advertising income for internet companies. This is without mentioning the fierce competition Google faces with local companies such as Baidu.com, who according to Reuters by 2007 dominated 58.1% of the market share in China and is steadily on the rise; and the fact that at one stage Chinese government tried to remove Google’s operating license for punishing it expressing its opinion on the issue in a Washington congressional hearing (Bishop & Myrick, 2006).
Google’s case demonstrates that doing business in China is hard, and when business operation crosses path with politics, it can be even more difficult for multinationals to operate in China. This is why before the decision to enter, companies that aim to expand market share to China must consider beyond business and economics factors, to also include cultural differences and political restrictions that might prove detrimental to business’ success in China.
China has been closed up to the outside world for an extensive period of time, when it opened up it experienced record breaking growth rates that brought much uncertainty in society as the great rush of wealth to one proportion of the population quickly divides the originally ‘commune’ oriented society. Imagine in a tumultuous time like this, control of information flow is critical, or perhaps even, necessary. Unlike western culture that encourages self expression, Chinese are taught not to question authorities. This repressive culture is cultivated especially throughout the past decades, and would take some time for the Chinese to adjust to western style of thinking – through change in the education system by starters. This gradual process is facilitated by government’s control of information exposure; over exposing controversial information to a generation not ready to think objectively and independently may run the risk of being taking advantage of by vicious propaganda, which may lead to social riot. This piece will not make judgment on whether restricting information access to the general public is morally acceptable, but merely states it as a mean of political control in the very special case that is China.
Comparing to 10 years ago, before the internet became popular and easily accessible, Chinese media was completely controlled by the government. All news released to the public must go through levels of screening and selecting, and in the process, truth might be manipulated. China has come a long way since then. Although Google’s decision to stay in the Chinese market might compromise their value in the short term, it is unquestionable that by remaining in the market internet companies such as Google continues to make a presence and ‘contribute to the information flow that is happening in China [and] increasingly contribute to Chinese political engagement’ (Sabbagh, D, 2006).
One thing to note, Chinese people are aware of the ‘Great Firewall’. Chinese government’s tactics to restrict access to western reports are well known by its people. Learned internet users in China can easily cross the ‘Great Firewall’ by using a free web proxy that is readily available on unrestricted websites and then search for whatever information they want. So in practice, the censorship is only useful to block information accessing the Chinese people who do not want to engage with sensitive materials in the first place. The government officials are also aware of this situation; therefore it is not hard to see why over time, when Chinese government sees that blocking access through censorship is in vain and increasingly doing more harm to the reputation of China, restrictive stipulations will eventually be removed.
So in conclusion, it is understandable why Google insist to operate in China against media scrutiny, for business expansion reasons and also because the controversy itself helps Chinese citizens to be aware of the issue, which contributes towards the fight for democracy and free speech (McLaughlin, A, 2006). On the other hand, doing business in China can still be challenging at this unsettling time as China faces major change in all dimensions of social and political structures, but the hope remains that China will improve on its human rights issue to evolve to a different level of world dominance that will make Napoleon blush – in both of economic scale and social sense.
List of References
Bishop, J & Myrick, C; 2006., FOCUS - Google license issue seized by China to make political statement. AFX News Limited, February 23, 2006.
http://www.forbes.com/work/feeds/afx/2006/02/23/afx2547661.htmlBrenkert, G; 2007., Google, China, and moral compromise. Lecture notes of Georgetown University.
http://www.scu.edu/ethics/practicing/focusareas/business/conference/2007/presentations/georgegoogle.pdfMcLaughlin, A; 2006., Google in China. Official Google Blog, January 27, 2006.
http://googleblog.blogspot.com/2006/01/google-in-china.htmlSabbagh, D; 2006., No Tibet or Tiananmen on Google's Chinese site. TimesOnline, January 25, 2006.
http://business.timesonline.co.uk/tol/business/markets/china/article719192.eceTimesOnline, 2006., Gates defends China's internet restrictions. January 27, 2006.
http://business.timesonline.co.uk/tol/business/markets/china/article721120.ece
