What does China have to lose by saying goodbye to Google?

What does China have to lose by saying goodbye to Google?

Summary: Quite a bit of attention has been paid to what Google may lose by exiting the Chinese market. ZDNet bloggers, along with countless news outlets have been covering the evolving Google-China story in detail and it all comes down to neither Google nor China being willing to budge in their positions on censorship.

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TOPICS: China, Google
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Special Report: Google-China Quite a bit of attention has been paid to what Google may lose by exiting the Chinese market. ZDNet bloggers, along with countless news outlets have been covering the evolving Google-China story in detail and it all comes down to neither Google nor China being willing to budge in their positions on censorship. Many would argue that Google has a responsibility to try and influence the Chinese government towards a freer society, even if that means walking away from an enormous growth market. ZDNet's Ed Burnette argues quite passionately that continuing to do business in and with China, playing by China's rules, is absolutely necessary to maintain a connection with the most populous nation on earth.

One has to wonder, however, given the dominance of Baidu (China's state-friendly search engine) and the relatively crippled versions of Google services that Chinese users have experienced, if China will really feel the impact of a Google exit. Sure, Google is a (the?) dominant force on the Internet and in the cloud outside of China. But within this billion-plus nation, users can only access a fraction of Google Apps, YouTube is blocked by China itself, and, until this week, search results and News were heavily censored. Where was Google adding value for the Chinese people?

It did let users know when their search results were being filtered and was arguably somewhat less restrictive than Baidu. Android is coming to Chinese phone makers and telecommunications companies and that doesn't appear to be changing. However, many western companies are actively recruiting in China and/or setting up development shops on the Chinese mainland because really good programmers are incredibly easy to find. Given the entrepreneurial spirit enabled by Chinese capitalistic reforms, it seems pretty likely that cloud-based services are going to emerge in China with or without Google.

So why not just say goodbye to Google? Will the Chinese government (or the Chinese economy for that matter) really suffer? It doesn't take a Harvard economist to figure out that Google will feel the hit long term if they are locked out of the biggest Internet market in the world. Even without China, though, they'll still be raking in the billions. It may be harder to be cavalier 5 years from now when potential ad revenues out of China dwarf those in the western world, but that's another discussion. I want to know why China hasn't just walked away from tense talks with Google.

No matter how carefully the Chinese government attempts to protect its interests, though, China needs the west. China needs trade partners in its journey from a manufacturing economy to a knowledge economy. Given China's vast human resources, this will be a long road. Closing its doors to Google is not just symbolic (symbols matter little to consumers who aren't about to stop shopping at Walmart and buying Chinese exports), but represents a conscious decision to close itself off after many years of slowly opening to partners.

Baidu is a perfectly fine search engine. Competition, however, is vitally important in an increasingly capitalistic society. Would Google be as good as it is here in the States if it didn't have Bing and Yahoo nipping at its heels? Shutting Google out of China means that China is retreating from (rather than actively participating in, and sometimes dominating) a global economy. Isolationism, though useful for totalitarian governments, will hardly promote economic growth. Forcing Google out of the country is a fairly powerful act of isolationism.

Perhaps the best question of all, though, is how can China now peacefully coexist with Google (and other knowledge-based companies like it who want to operate on the mainland) while still saving face in this most recent row? Eric Schmidt hinted that "something will happen soon." That something will either be the beginnings of a different sort of partnership or the start of another figurative Great Wall.

Topics: China, Google

Christopher Dawson

About Christopher Dawson

Chris Dawson is a freelance writer, consultant, and policy advocate with 20 years of experience in education, technology, and the intersection of the two.

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51 comments
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  • China will fall behind

    because they will lose Google expertise and open software.
    Linux Geek
    • No they won't.

      If Google is releasing open source software into the public, China can then get it at a number of places.

      They'll probally even be able to get Android.
      John Zern
      • they can prohibit it by license

        and the Chinese can no longer use it unless they rely on google services.
        Linux Geek
        • Nope, doesn't work that way.

          Even you know that much about open sores.
          No_Ax_to_Grind
    • A typical American comments ....

      maybe he wants to say, if US falls out, the world
      will stop
      Elibom
      • Typical European comment.

        Actually, it was just a Linux Geek comment.
        Bruizer
      • What does America have to do with China and Google FUp?

        The only thing is Google is headquartered in US, other than that I don't
        see any relation.
        --Ram--
        Ram U
    • No they won't.

      And they won't even care.
      Bruizer
      • They don't care

        technology is not the exclusive domain of the US. Open your eyse and see yourself and you will see the future...china's future and the US future. Do not be idiotic and think google is the end all.
        Bradish@...
    • All because of business, neither democracy nor politics ...

      The real story I can tell is this happened are
      due to Google's obligation from all related US
      and China laws and regulations.

      In China, for a internet service provider like
      Google, Yahoo, Baidu and Microsoft, it is
      mandatory to do some filtering on search
      results. This has been there for many many
      years. It is not a secret.

      In US, it is mandatory to satisfy certain
      business obligation if a company wants to do
      business with US government. This is due to US
      regulation and laws. It is not a secret too.
      Many defense companies follow these regulations,
      such as Boeing, Lockheed Martin, Unite
      technologies and L3.

      Google is negotiating a service or defense
      contract with US government. One of the pre-
      requirements for being granted this kind of
      contracts is that Google can't help China
      government do the censorship. Therefore Google
      is facing the difficult in obeying either US
      laws or China laws. In order to secure the
      potential very lucrative US government contract,
      Google has been in talk with China government on
      some possible compromise for several month.
      The result is China government refused any
      compromise and Google has to make a choice.

      After calculating the short-term business
      benefits of US government contract and the
      payback of China market in short term, Google
      decided to partially leave China market. (In
      fact, Google is not doing so well in China
      market.)

      This is my understanding ...

      The fact is, the Google's decision is a pure
      business decision, really not much about China
      democracy or China censorship. If it is not
      because of the US government contracts, Google
      will stay in China as usual.

      If you are looking at how Boeing, Lockheed
      martin, United Technologis are doing business in
      China, you will understanding this
      Elibom
    • Since when Google Search is Open Source?

      n/t
      Ram U
    • China will not fall behind

      even if lose Google will lead to 5 years economic down. Comparing between survival and development, China will choose survival.
      wskwntei
  • No-one bothers mentioning why and what

    ...the Chinamen are trying to censor. It's called "the truth".
    Feldwebel Wolfenstool
    • Yes, very much the same as the US.

      What, you thought US search isn't censored?
      No_Ax_to_Grind
      • Exactly

        And the "truth" is a very tricky thing. VERY tricky.
        klumper
        • Quite tricky

          The "Truth" can be quite relative & can at times turn around & bite you when you are not looking.
          JakeZ
  • In a word, NO.

    China will do just fine and others will take Googles place.
    No_Ax_to_Grind
  • Here's how I feel: Who gives a **** what China thinks/does. No matter

    Next topic please. Thank you Christopher.
    Dietrich T. Schmitz GNU/Linux Advocate
    • I do!

      They can do whatever the frak their hearts desire, just as long as their not hacking networks or invading sovereign countries.
      The one and only, Cylon Centurion
      • They are doing much more than that.

        o Offshoring jobs from the USA into China.
        o Trade Deficit between US and China
        o Ignoring Free Trade (hence the Trade Deficit)
        o Reducing the financial net worth of our citizens[1].
        o Destablizing/Devaluing the US currency[2]

        ==================================
        [1] By virtue of the Trade Deficit, monies spent on goods 'Made in China' flow out of the U.S. and into the China economy and trickle down there, not here.
        [2] Read the Congressional Research Service report <a href="http://www.fas.org/sgp/crs/row/RS21625.pdf">China's Currency: A Summary of Economic Issues</a>.
        Dietrich T. Schmitz GNU/Linux Advocate