Google’s entrance into the Chinese market has placed the leading internet search company into a position where they must decide if operating in China fits their business strategy. Initially, the question of whether or not to operate in China seemed elementary. The country had 110 billion internet users which presented a ripe opportunity for Google to introduce its services. However, to do business in China, Google had to follow the censorship requests of the Chinese government. With the launch of Google.cn, the Chinese population received the same censored results but instead of the Chinese government censoring data, it was censored by Google. As a result, Google is faced with key problems in this situation. These problems are associated with Google’s ability to adapt to the environment without compromising their principles. These principles include the removal of applications and censoring its own search results.
Google’s strategy in China as noted by Andrew Mclaughlin posted on a February 1, 2006 blog explained that doing business in China required Google to balance the issues of improved disclosure and targeted services. While keeping in line with the demands of the Chinese government, this communication is merely used to explain the sacrificing of quality content allowing Chinese users to experience the true speed of the Google search engine; increasing market share and profits. Additionally, the company did not offer Chinese users Gmail or Blogger. A major reason Google removed these applications from their Google.cn site is because it would contain personal and confidential information which could be requested by the Chinese government. Providing a clear message of why these services are not included, Mclaughlin details that such data is subject to the laws of the country in which it is stored and as a result chose not to offer those services in that market.
These decisions provide a great example of adapting to the ever changing wave of the business environment. Google saw a ripe market. Moving into China was a good business decision. However, the company’s principles were compromised. In 2005, Google refused to provide information to the U.S. government in regards to the Child Online Protection Act citing the importance of user privacy. It seems as though the principle of user privacy Google referenced in 2005 was not used when deciding to enter into China where user privacy and applications containing such information was either censored or removed.
Upon Google’s IPO release, it released a mission statement saying they believed in long term gains and would focus on things that would be better for the world and forgo short term gains. This did not seem the case when Google entered China. In January 2006, Google placed computers servers in China to speed up the service in that country thereby, officially entering the market and working with the Chinese government. A company with an unofficial motto, “Don’t Be Evil”, was now itself censoring information to its users for no reason other than to simply take advantage of the internet market in China. Although, the company became a target of intense criticism, Wall Street responded by increasing its share value by 3.6%. Gaining market positioning in China was no surprise. Google was a favorite in China and demand for a faster service was requested by Chinese users. Google’s reputation in the United States began loose ground. Co-Chairman of the human rights panel of the House of Representatives, Chris Smith stated, “By complying with China’s demand for censorship in order to enter the booming Chinese market, some of the top American Internet firms in essence have become “a megaphone for communist propaganda and a tool for controlling public opinion”. Google entered into the Chinese market as a way to compete with its competitors for a share of the growing Chinese economy. Unfortunately, the company realized the cost of aiding the censorship of materials and not staying consistent with its regards of user privacy. Though motivated by the projection of huge profits, Google discovering the true costs of compromising its principles; a badly beaten reputation.
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