Navigating Chinas Market Complexities

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Like many others before him who have reported on the market complexities that Western companies face in setting up shop in China, Thompson notes that the challenges which Google has faced in bringing its search engine brand are not only monumental but labyrinthine.

The Chinese government is notorious for putting its full weight into censorship on the World Wide Web. However, the situation is not as simple as micromanaging all the contents of the Internet which pass from overseas servers into domestic screens.

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Thompson reports than rather than attempting to create a master list of sites and words to be censored, the Chinese government utilizes intimidation as its primary tool while local companies are expected to exercise self-regulation in determining where and when they do not operate Internet content that does not conflict with the interests of the ruling party.

While it is easy to portray this situation as a sort of self-tyranny, Elgin and Einhorn (2006) note that under the auspices of the Public Pledge on Self-Discipline for the Chinese Internet Industry, it is the responsibility of domestic websites to not distribute superstition, obscenity or other information which destabilizes society and state security.

Therefore, companies should not depend solely on the government to provide them with a reference on these matters but “err on the side of caution,” to avoid being slapped on the wrist by the Golden Shield Project, known in the popular press as “The Great Firewall of China.”

Essentially a large scale Internet surveillance strategy and task force initiative, the Golden Shield Project employs a broad range of Internet surveillance and control technologies – DNS blocks, IP blacklisting, keyword restrictions and brute force content scanning – in order to prevent access to overseas information that may contradict the party line.

Fallows (2008) notes that the ultimate function of the Golden Shield Project is not to regulate the entire contents of the Internet, but rather increase the obstacles to access in such a way that citizens will turn to the information that is immediately accessible to them, namely local sources that are already subjected to more efficient forms of control.

“[The Chinese, like Americans, are] interested mainly in their own country. All around them is more information about China and things Chinese than they could possibly take in. When this much is available inside the Great Firewall, why go to the expense and bother, or incur the possible risk, of trying to look outside? […] By making the search for external information a nuisance, they drive Chinese people back to an environment in which familiar tools of social control come into play.” (Fallows, 2006)

It is this socio-technological climate that explains why Google – the Menlo Park, CA based Internet application company best known for its search engine – has set up shop in Beijing at all. Although the company was able to avoid the legal authority of the Chinese government by keeping its operations outside of the mainland, it was also losing the share of the search engine market to its chief competitor, Baidu. Between 2002 and 2005, the positions of both companies were reversed, with Google being utterly deflated by repeated blocks and Baidu being rewarded handsomely by managing its search result indexes to conform to the censorship laws. (Thompson, 2006)

Thompson observes that it is common practice for Chinese Internet firms to approach the government with reports about the illicit contents of its competitors, recognizing full well the benefits they earn from getting them slapped by the regulators. “In China, the censorship regime is not only a political tool; it is also a competitive one — a cudgel that private firms use to beat one another with.” As such, Google co-founder Sergey Brin openly suspects that a 2002 shutdown to Google was instigated by a Chinese competitor, though he is not brazen enough to name names, despite numerous lines of inquiry that name Baidu as the most likely suspect.

Furthermore, by continuing to maintain its operations off shore, Google was suffering from transfer delays that the Great Firewall imposes upon access to overseas sites. Thompson (2006) = notes that the Google executives realized that if Google continued operating on foreign soil, slowdowns and censor blocks would eventually erode their market share to an almost negligible figure, but in order to move operations into China, they would have to comply self-censorship laws. Simply put, Google really only had one option: To remain relevant to Chinese Netizens, a Chinese subsidiary must emerge. Enter Google China.

Compromising with state censorship laws did not go over well with several parties – human rights advocates, journalists and stockholders, to name a few – but the compromise was rationalized as the lesser of two evils, in reference to the frequently quoted Google motto of “Don’t Be Evil.” The argument is that Google does more good to China by participating in information access in spite of censorship laws, than it does in pulling out:

The carrot was Google's halcyon concept of itself, the belief that merely by improving access to information in an authoritarian country, it would be doing good. [… Google] could do better than the local Chinese firms, which acquiesce to the censorship regime with a shrug. Sure, Google would have to censor the most politically sensitive Web sites […] along with pornography. But that was only a tiny percentage of what Chinese users search for on Google. Google could still improve Chinese citizens' ability to learn about AIDS, environmental problems, avian flu, world markets. (Thompson, 2006)

Additionally, by moving into China, Google China is an attempt to increase search speed and site access. In any case, Google argued that "While removing search results is inconsistent with Google's mission, providing no information (or a heavily degraded user experience that amounts to no information) is more inconsistent with our mission,” went a company statement. (BBC News, 2006)

However, Google China does not provide other services that Google usually does – blogging, chat and e-mail – because of the company’s worries that the government could demand personal information for policing purposes. This is clearly a nod to the controversies which Microsoft and Yahoo had faced in 2004. In the case of Yahoo China, controversy and criticism from numerous quarters attended their decision to hand over personal information to the Chinese government of a user who had leaked details on press restrictions to a pro-democracy Web site run by Chinese expats and was ultimately sentenced to ten years in prison. In the case of Microsoft, they complied with the government’s request to delete blog postings of free-speech blogger Zhao Jing, despite its servers operating beyond the reach of China’s legal authority. (BBC News, 2006; Thompson, 2006)

In any case, Google’s entry into China is an unsurprising maneuver in modern business, which has begun to see the billion-person population of China as a market with enormous potential. It is not only the best interest of stockholders to see Google expand its market share into China, but the best interest of its co-founders, who advocate the kind of information liberalism which typifies many Silicon Valley employers. For Google to fully legitimize their commitment to this, it must look to this goal on an international scale, as limiting this goal solely to governments that have fully deregulated speech means being selective about their goal. However, what may worry stockholders is that Brin does not believe that Google China can turn a profit in under a few years. Thompson (2006) quotes Brin being explicitly candid in saying that this "wasn't as much a business decision as a decision about getting people information. And we decided in the end that we should make this compromise."

Fallows (2006) believes that the government’s ability to restrict political discourse is not about to fade any time, and in that sense, it is necessary for a company like Google to respect the nuances of the local socio-politic. While it would be easy to cry foul, this does not necessarily mean that the company is going to self-regulate itself into meaninglessness. It simply means that the company must respect the interests of the Chinese government, while fulfilling its higher goals of improving access to information… and not all of it is political or controversial. Non-specific issues on environmental matters and disease pandemics, as noted above, are of greater importance than destabilizing the ruling autocracy, never mind the fact that political dissidence is far from being the most important issue on the minds of Chinese Netizens.

Simply put, Google’s entry into the Chinese Internet market is another step forward for cultural convergence. Although it is hardly the progenitor for Internet based services in China, many of the local companies such as search rival Baidu and blog provider Toodou are just that, local companies that are relevant to local users by being familiar with local customs and habituating itself to the nuances of the Chinese. Google China means that it can improve cultural convergence not just by improving access to information, but by diversifying the portals which are available for this access – what Baidu indexes in its search catalog is different from what Google will, blocks notwithstanding. Simply put, Google China imports its parent company’s specific corporate ethos of Don’t Be Evil in a decidedly non-political fashion by allowing users and sites of various cultures to converge together, despite the cultural clash which pervades from not just the Great Firewall but through the sheer but simple difference of cultures that exist across Chinese Internet users and Western ones.

I agree with Google’s operating model, despite the ease by which one can fault its compromise. But as Thompson (2006) notes, this fault is predicated entirely on how one regards the nature of democracy and free speech and most Americans, including those who fancy themselves as pundits paying full respect to the cultural nuances of China, believe in free speech and democracy as an absolute: “A country either fully embraces these principles, or it disappears down the slippery slope of totalitarianism. But China's bloggers and Internet users have already lived at the bottom of the slippery slope.” Surely, Google China means being complicit with political interests, but anybody who has lived in anything less than a democracy, such as today’s generation of Chinese, and anybody who has learned to look past what the government has hidden, such as voters who learned of Abu Ghraib to the chagrin of the Bush Administration, such censorship is moot, especially when set against the goal that Google has set for itself. As imperfect as China’s Firewall renders the Internet, a foreign invader like Google means that it doesn’t have to act like a cyberspace messiah to do some good for the country.

REFERENCES

Thompson, C. (2006, April 23). “Google’s China Problem (and China’s Google Problem.)” The New York Times. Retrieved online on February 3, 2009 from: http://www.nytimes.com/2006/04/23/magazine/23google.html?pagewanted=all

Elgin, B. & Einhorn, B. (2006, January 12). “The Great Firewall of China.” Businessweek. Retrieved online on February 2, 2009 from: http://www.businessweek.com/technology/content/jan2006/tc20060112_434051.htm

Fallows, J. (2008, March) “The Connection Has Been Reset.” The Atlantic. Retrieved online on February 4, 2009 from: http://www.theatlantic.com/doc/200803/chinese-firewall

BBC News. (2006, January 25) “Google censors itself for China.” BBC News. Retrieved online on February , 2009 from: http://news.bbc.co.uk/2/hi/technology/4645596.stm