Google: Entry to China Essay
Google: Entry to China
Google is widely known as a technology company that created a search engine site proven to be a helpful tool for most people because it helps you find the most relevant answer from the all the websites. This led to their success in the US market and worldwide. However, Google faced numerous criticisms on their business strategy to enter China, a market widely known for its government’s restrictions on content on the Internet, often referred to as the “Great Firewall of China” (As cited in Hoegberg, 2013, para. 2). With potential of long-term financial gain of doing business in China, should Google continue to do business with a market that is in conflict with its business motto?
When founders Larry Page and Sergey Brin collaborated on creating a search engine site in 1996, their mission is to organize a seemingly infinite amount of information on the web (“Our History in Depth”,n.d., para. 4 & 5). The company later on received recognition from PC Magazine as the search engine of choice (“Our History in Depth”,n.d., para. 9). Then in 2004, Google, Inc. offered an IPO at $85 and closed at $194 at year-end 2004 reaping the IPO investors a healthy gain (Travlos, 2012, para. 1). Post-IPO Google, Inc. means finding more sources for revenue for the company. Google ventured outside of the web search engine market by creating applications for mobile, media brosing, home & office, social media and the list goes on and on (“Products”, n.d.) and revenues are generated from online advertising or their own product: Ad words (“Adwords”, n.d., para. 1). With tremendous growth of the company, Google founders have embraced the informal corporate motto “Don’t be evil” and also developed an ethical code of conduct for both internal and external audiences (as cited in Martin, 2006, p. 5).
Martin reports that in 2006 China has a population of 1.6 billion people and is an attractive market for many U.S. companies (Martin, 2006, p. 6). Also, with China’s transformation to a market economy (Zimmerman, A., & Fey, R, 2001, p. 15-28), George Magliano, an economist at IHS Automotive, states that “This is the wave of the future” and that “The Chinese market is going to grow faster than the U.S., and it will continue to be this way” (Hirsch, 2011, p. 1). The rapid growth of Internet use in China is being accompanied by more sophisticated official efforts at censorship as stated in the report issued by the China Internet Network Information Centre (CNNIC), an organization under the official Chinese Academy of Science, (“China politics: Internet censorship grows more sophisticated”, 2003, para. 1).
Google in China
In 2000, part of Google, Inc. global strategy was to enter the Chinese market creating a Chinese-language version of the website, and because of the regulations in China, the server is housed in the US (Martin, 2006, p. 12). However because of complex Internet infrastructure of Chinese government, the site became inaccessible and slower performance than other sites (Martin, 2006, p. 13). This became an issue to the users and therefore losing market share (Martin, 2006, p. 13). Google reached a deal with the Chinese government to create Google.cn, a site that is in compliance with Chinese regulations on censorship (Martin, 2006, p. 13).
Strengths Google.com is a trusted name worldwide as a search engine site and that there was no need to advertise since Google users typically share the information with anyone, hence most individuals common answer to a question is to “Just Google it” (Clark, Greniuk, Riherd, Rome and Yu, 2010, para. 2). With its global reach and growing traffic, online advertisers would allot budget for spend with Google.com as part of online marketing strategy to reach online consumers, potentially reaching 1 billion Global unique visitors (“Google Reaches 1 Billion Global Visitors”, 2011, para.1).
Google entered China with their mission, stated on their website “organize the world’s information and make it universally accessible and useful” (“About Google.com”, n.d., para.1) which is in contradiction to Chinese government’s ideology on Internet censorship is “If you open the window for fresh air, you have to expect some flies to blow in” (“Internet censorship in the People’s Republic of China”, n.d., para. 3). Google executives clearly did not follow this ideology when the company first entered China. As a result, Chinese government has added a strain on the company’s efforts to gain market share.
The “Great Firewall of China” limits the searching capabilities of terms on the internet in China, even keywords such as Freedom are off limits to users (“Internet Censorship in China”, 2012, para. 3) this hinders Google to operate and provide their services to Chinese consumers. Then this led to loosing market share to Baidu.com (“Baidu vs. Google”, 2010, para. 5).
Google possess the technology and resources to create products (“Our products and services, n.d., para.1) that would meet Chinese government regulations as Larry Page, co-founder and CEO, would describe Google.com, the “perfect search engine” as something that “understands exactly what you mean and gives you back exactly what you want” (“Products”, n.d., para.1). This should have been the initial business strategy to avoid criticisms and struggle to meet demands of Chinese government and the internet users in China. Oppose to negotiating with Chinese government, because this can be damaging to company’s image to China and the Chinese citizens.
Google decision to create Google.cn is a clear contradiction to the company motto however when the Utilitarianism philosophical approach is applied as part of the strategy “promote the happiness of others, even at the expense of our own projects, our integrity, or the welfare of our friends and family” (Hills, 2010, p. 225), the results may offset the implications to company’s reputation and plans to gain market share in a country where business practices are very different from theirs.
Since corporate ethics will be questioned, perhaps a partnership with small technology companies in China and other local program opportunities that would steer the message of the company’s decision to bow to Chinese government regulations.
In addition, hiring Chinese executives and employees would be an ideal start as the company enters a market like China. These individuals have lived, and survived the political and economic intricacies of Chinese market. They are the ones that have the working knowledge, and learning from other companies that passing the helm to strong local replacements is essential for sustained profitable growth (Hsieh, Lavoie, and Samek, 1999, para. 1).
China is known as the Kingdom of Bamboo because it has the most bamboo of any country in the world (“Bamboo and Chinese Culture”, n.d. para. 1). In addition, Bamboo’s resistance to stretching and its ability to support weight are at least double those of other kinds of wood, making bamboo an ideal material for houses, scaffolding, supporting pillars, and work sheds (“Bamboo and Chinese Culture”, n.d. para. 8). That being said, doing business in China would be similar to working with bamboo, it is resilient to change and therefore adapting to the market is the recommended strategy.
Even if it means changing the Company’s product and ideologies so that the company may prosper in the long term partnership with the local government and gain market share. Google.cn business model would be the initial offering because it adheres to government regulations and there won’t be any struggle in reaching the local market. And even with the criticisms that will arise from this decision, the financial gain and respect from the local market is what every company would want to achieve in this market, therefore it would be not just Google that will benefit from this, but also the citizens of China. Who knows in the future, when censorship is no longer in existence, Google can finally launch their products that are in compliance with company’s motto and provide the oppressed Chinese market of this freedom to view information without censor. In the end, the majority may benefit from this.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 2 October 2016
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