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I have been loosely following the Google case where Google stated or did not state that they are withdrawing from China or at least closing down google.cn and as a result probably has to close the office totally as Google is vocally opposing the Chinese Government’s Internet regulation and policy..

 

I am not sure what Google wants to achieve or think they can achieve but I am 100% confident that the Chinese will not back off; particularly when been ‘attacked’ openly.  There are a few points to this story that I think is important to understand. 

 

For Google, privacy and confidentially are at the forefront of whatever they do.  Consumers need to completely trust Google given that vast information that Google collects, analyze and monetize through various source (searches, clicks, gmail and so forth).  If consumers starts to believe that Google may start censuring information on government demands (e.g. patriotic act), sharing data with intelligence bureaus to catch criminals, consumers may very quickly abandon Google services.

 

Consumer confidence would be the key priority to protect the business.

 

However, the Chinese representatives made an interesting point.  Why did Google filter off search results for American military bases (based on US Government directive) but not Chinese directives?  If this turns out to a trade-war, China will never back and it will not only hurt Google’s interests in China but also other american interests in the region.

 

And that brings me to another point that successful American companies often seems to struggle with in China - patience and understanding of how to deal with the Chinese market.  Look at Qualcomm and Microsoft.  Two highly successful American businesses with strong leaderships (Dr Jacobs and Gates/Ballmar) but struggled for years to break into China.  Qualcomm and Microsoft fired their Country Managers on a yearly basis due to the lack of progress.  And of course, the issue was not local management but how the Corporate were working and what they were expecting.

 

Qualcomm promoted Frank Meng and Microsoft recruited Tim Chen (an old Motorola China-hand) that managed to bridge and work between the local government and headquartered.  Tim told me the other day in a closed room conference that the key to success for him was to sign off a China Strategy that was taken to the Board for approvals.  Tim left Microsoft after 4 years successful putting MIcrosoft on the map in China.  Frank is still in charge, 6 years after promotion, where Qualcomm has developed decent business in China.

 

In the Google case, where key biz dev managers and Country Managers left on a regular bi-annual basis may point to one of the problems for Google’s China problem.

 

I think Google was taken off-guard about the effect from their initial announcement.  China Unicom blocked the launch of Motorola’s and Samsung’s Android handsets.  Will China Mobile be challenged as well with their OPhones (based on Android)? Can Google maintain R&D and sales of ads?

 

For China, the case must be a bit annoying and this could be the starting point for massive internal complaints and discussion.  Not only is it high profile international case and it will cause problems for how to attract and keep innovative R&D to China if this goes on.  But the internal discussion are more about filtering and censuring content, public and private discussion and that can turn out to an avalanche as at the same time, MIIT has enforced SMS screening of all SMS sent in China to monitor and blocked sensitive content (in this case, pornographic material).

 

What’s causing the debate is the screening, the filtering and why the Government should decide what is acceptable or not.  The Green Dame project were supposed to have the same effect but after heavy objections, the government withdrew.  Can the same result happen for Google and the SMS filtering?

 

“We made a strong decision that we wish to remain in China,” [Erik] Schmidt said. “We like the business opportunities there. We’d like to do that on somewhat different terms than we have.” (AP)  http://tr.im/M3yZ

 

Google.com is now blocked.  You can not connect to google.com from phones nor from computers.  Google states that they wanna stay in China but can they?

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