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Summary:

After Google said it would reevaluate its business in China, everyone from Om to Hillary Clinton has had something to say. To understand how the world beyond Silicon Valley sees it, we turned up some sources you might not go to on an everyday basis.

Google dropped a bomb yesterday, not merely for the technorati, but also for the world at large, by exposing Chinese attempts to hack into the networks of major U.S. companies as well as the email accounts of human rights activists. Google subsequently said it would no longer censor its web page in China, and would reevaluate its business operations in the country. So far, everyone from Om to Hillary Clinton has had something to say about the move, but in order to understand how the world beyond Silicon Valley sees it, we turned up some sources you might not go to on an everyday basis.

From China Daily (from the official Chinese newswire Xinhua):

Google’s possible retreat from China has prompted the company’s 700 China staff to fear for their jobs. “We were told that Google might quit China at a general meeting on Wednesday morning, and all of us feel very sad,” said an employee with Google’s Beijing office on condition of anonymity.

According to ChinaYouren:

The way the message has been drafted, chances for Google.cn to remain are slim. It will be very difficult for Google to step back from this, the whole tech World is going nuts about it. On the other hand, it is even more difficult for the Chinese authorities: even if they were willing to accept Google’s conditions (which they are not) they could never allow a Western company to publicly force their policies. Unless there is some kind of recanting, Google.cn is doomed.

China Digital Times has collected and translated tweets about the decision, including this one:

- @hecaitou: After Google leaves China, the world’s top three websites on Alexa —Google, Facebook and Youtube are all blocked in China. This is not an issue of Google abandoning China, but one of China abandoning the world. #googlecn

And from RCoversation:

On the other hand, a short Chinese-language report in Sina.com’s tech section is generating a long thread of comments from people who are unhappy about Google’s announcement because they don’t want to lose access to Google. Somebody has set up a website, http://www.googlebacktochina.com/ with a Chinese header that translates approximately as “Give me back my Google.” Famous tech blogger Keso mourns that Google’s retreat brings the Chinese Internet one step closer to being an Intranet.

And from Ars Technica (I know I said I wouldn’t use the usual tech suspects but the image they present of the history of Chinese hacking is first-rate):

As to goals, one of the biggest is ripping off research breakthroughs in order to save time. The report notes that “Chinese industrial espionage is providing a source of new technology without the necessity of investing time or money to perform research… Chinese espionage in the United States, which now comprises the single greatest threat to US technology, according to US counterintelligence officials, is straining the US capacity to respond. This illicit activity both from traditional techniques and computer-based activity are possibly contributing to China’s military modernization and its acquisition of new technical capabilities.”

And finally, this from The Atlantic:

But there are also reasons to think that a difficult and unpleasant stage of China-U.S. and China-world relations lies ahead. This is so on the economic front, as warned about here nearly a year ago with later evidence here. It may prove to be so on the environmental front — that is what the argument over China’s role in Copenhagen is about. It is increasingly so on the political-liberties front, as witness Vaclav Havel’s denunciation of the recent 11-year prison sentence for the man who is in many ways his Chinese counterpart, Liu Xiaobo. And if a major U.S. company — indeed, Google has been ranked the #1 brand in the world — has concluded that, in effect, it must break diplomatic relations with China because its policies are too repressive and intrusive to make peace with, that is a significant judgment.

Thumbnail image courtesy of Flickr user permanently scatterbrained

  1. Well, the time has come: the world must start to treat treat China as a prostitue (having their way over there and paying chinese fees – censorship, awful work conditions).

    What has happened so far is that the international community has been tolerating chinese reiterated disrespect for values such as freedom of speech, decent work conditions, etc., just because it’s lucrative. After all, everyone wants to take advantage on Chinese booms. There’s a huge hypocrisy on the fact that while most countries speak loudly about the unfair conditions of Chinese modus operandi, their governments do nothing to stand for the values that China is blind about.

    And that’s prostitution, pure and simple.

    I hope that Google’s decision may be followed by other companies. The world must stop its greedy behavior towards the Chinese and start caring about the way things are done up there so we have our flashy cheap toys from there.

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  2. it does look as if China abandon the world, again and it is sad
    I think beyond the tech story we should be sad that China, Iran and many more block what became a basic tool for every person.

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  3. Great links.. wonder what will China come up with but they already have their own set of huge internet products :-)

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  4. It is all about business. Google need someway to get out.Bec they cannot compete with Baidu since it is backed by Chinese Government.

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  5. Very Interesting comments …

    As long as the world economy is one of numbers and bottom-lines instead of true human value and purpose, oppressive systems will continue to exist and flourish…

    Why is this a surprise, the Chinese system, not the people, was always like that and Google and other companies should have stayed true to their mission instead of being blinded by money…

    The US market is still the largest in the world, if American companies were to stop working in china, or threaten to do so, china might begin to rethink its stubbornness and polices…

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  6. .

    Good and bad influences included; when a giant like China has repressive policies, it has massive consequences for all of humanity. The simple idea that they will take care of their own stuff does not suite the global reality at all. What they do to themselves has a direct effect on all of us! It is high time for US and other Democratic societies to consider this issue.

    Japan is also at decision point. They are making overtures to China and considering changes regarding US presence. All of this is going on when the digital world is converging towards greater convenience and usability. This convergence will have the greatest impact in India, I am sure.

    .

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  7. Yup. Let’s all retreat to Cold War policies. It’s easier than the hard work of diplomacy or commerce.

    Problem is, that also reinforces America’s special xenophobia – “China is stealing all our great ideas and couldn’t possibly design anything on their own”. Having toiled through the Wen Ho Lee case here in New Mexico, I don’t think we need more of that crap thinking.

    On the commercial side, if you’re not doing business with companies in a nation, your leverage is what?

    Democracy is worth fighting for – an ideal I’ve fought for for decades here in the GOUSA. It ain’t a religion.

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    1. .

      Eideard,

      I agree with your intent. Our (US) engagement instead of opposition has helped China advance. In an oblique way, credit goes to Sam Walton (of Walmart), Texas Instruments (that produced the first chip) and oil technology (that was born in Texas) plus a whole lot more. Absolutely no doubt about that.

      There is also another fact about the human brain that we have discovered. I will summarize it
      It is that the number of connections/combinations the neurons can make in an average brain is close to the number of known particles ! That means any person in any part of the world is a potential genius in whatever he/she chooses to focus upon. This idea is hard to sink in. While US is proud of certain things, India is proud of it’s stuff and another country feels it is incapable of progress. Belief is reality to the believer. It is what we end up manifesting. It is about how we psyche ourselves !

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  8. My comments on this news item are posted here:
    http://www.boulder2beijing.com/2010/01/googles-pr-play-alternative-theory.html

    …but here’s the crux of what I said:

    “By hanging their hat on the hacking incident, Sergei and Larry kill two birds with one stone: they curry political favor back home and they obscure the poor performance of their Chinese subsidiaries. Small wonder, then, that this whole story broke on the same day that GOOG announced its Q4 2009 investor results.”

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  9. Google probably has been wanting out of China for some time. Like many companies it had felt pressure to be in the ‘largest market of the world’. The problem is that it really isn’t equipped to compete with the likes of Baidu even if the playing field was level, which it isn’t. As a poster upthread noted the Chinese Internet is entertainment dominated and not information/search dominated like in the USA. Just look at Baidu and you’ll see videos, music, shopping and celebrity news where Baidu makes much of their revenue. Google doesn’t have this content and more importantly Google is bound by western business ethics that prohibit the violation of copyright that the Chinese content companies engage in.

    Secondly, the deck is stacked. There are no real opportunities to sell to the wider Chinese Internet audience for foreign companies. The Chinese government considers information distribution and the Internet key to its rather tenuous hold on 1.5 billion people. It will not let any foreign company participate in a significant way in this area. Period. On top of this is a system of corruption that foreign companies can’t possible engage in. Google indeed realizes this, that even if they could compete the rule of law doesn’t protect them and their business will be given to their competitors. One needs only look at the Youtube experience in China and the rise of Tudou as a result.

    Thirdly, even if Google was able to compete and the rule of law applied the market opportunity really isn’t that big. Of course you may sputter about this seemingly absurd statement given your week in China, however the facts don’t add up. Baidu is projecting about some $800M of revenue in 2010, assuming you trust that figure (you shouldn’t trust any number coming out of China). It seems around half of Baidu’s revenue is from search where Google could participate. Google has 17% of the Chinese search market in the latest figures I could see (significantly down, they’re losing due to the first two points I’ve made above). Doing the math this equates to some potential $73M in revenue for 2010. Probably equivalent to what they get from Northern Ireland.

    There is no upside for Google in China.

    Adding to that depressing bottom line is the fact of the continuous attacks on the infrastructure, the probable infiltration of Google by Chinese spies (see Wikileaks for more), the demands by the Chinese government for access to Google’s logs and the beating that Google’s reputation is taking in its important markets it’s pretty obvious that the Google exec is fed up. Leave China to the Chinese and return when there’s rule of law is their likely strategy.

    My background is as an Internet entrepreneur that worked on a startup in Beijing for the past couple of years, having recently returned to Canada after falling prey to many of these issues, though at a much smaller scale than Google of course.

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  10. I have to wonder since Google was already making some core concessions on doing business in China and all the hurdles Poutine so kindly outlined, if the hacking wasnt a final straw in a tall pile, not because it was from China but because Google discovered WHO in China it initiated from.

    I wouldnt be surprised if it was someone blatantly flaunting whom they were in the Chinese technological landscape.

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  11. Kudos to Google for getting angry and threatening to go back to its original mission statement–”do no evil.” For too long, has it changed around its basic purpose just to please the Chinese government.
    Still, there may be some long-term implications for the king of all search engines. Right now, the company can surely retain its powerful position, even if it loses a good majority of users. But, as the years progress and the number of Chinese internet users grows, it could be missing out on the single largest market.
    There is an interesting video on all of this at Newsy.com. It summarizes conflicts between the company and the highly controlling and still rather centralized Chinese government. Take a look:

    http://www.newsy.com/videos/google-and-china-face-off

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  12. I live in China and I love Google. It is too sad to hear Google may exit China. But if this really happens, China will become an isolated territory again. Its economy will collaps and the country will bo back to 1960s.

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  13. A tongue in cheek update on the China situation from Google’s Android, http://blog.beema.com.

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  14. Contrary to the poster that China is going to collapse, China will be fine without google.

    The reason why Google is losing to Baidu is that Google is a western company and does business with western mentality. Instead of serving what the local customer wants by developing custom products for the market, like most american companies (ie. serving boat cars like the Bel Air to Asian and European tiny roads in the 50s) Google make the mistakes of other american companies that is drowned to extinction in foreign markets.

    Contrary to the knowledge of Americans, Google is being used as a political tool by the NED. It is through facebook and twitter that created the ensemble protest in Iran, the riots in China are also caused by US stirring the pot via these networks. China just had enough of the US causing disturbance in its internal politics. China after all isnt causing rebellion among US populace.

    2010 will be the nadir of US and Chinese relations. We will see a return to cold war relations unseen before, if the US keeps continue this intransigence, this may escalate into dangerous territory.

    War between China and US may go hot if Obama isnt careful. Economic war usually evolves to something that in the result to a hot physical war. If the US thinks China is easy to bomb, be careful with what you wish for. A country that cannot pacify Iraq, Afghanistan will launch a war with China is all the more idiocy. A war with China will be suicide, as like the USSR, China does have a doomsday device as well. Humanity must be prepared to survive in nuclear winter that will cover most of earth if trigger happy americans decide this is the only way out for them.

    The US should be careful with what they wish for, pissing off the Chinese will only hasten the collapse of the US economy. There are emergency talks now in China about unloading treasury bonds some time this year to coincide with big reserve gold purchases as well as the floating of the OPEC currency gulfo. Once the treasury bonds are unleashed, Americans have to be prepared to have long line ups at the gas pumps as the petro dollar dies. The death of the petro dollar will be the death nail to the US military.

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  15. Overall, the announcement is much more problematic for China than for Google. This is the first time that a Western company admit publicly that business condition in China renders operations unprofitable, I’ll bet that after that investors in the internet industry in China will think twice before pouring millions in the market without prospect of ROI.

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  16. .

    It seems China has a system that mixes Communistic ideas (Top heavy controls) with that of Capitalism (open and free market). This bad mix does not do justice to either one of them.

    My simple principle (Idiot’s guide?) on transfer of wealth is that you can suck it one way only to a certain limit and then the system itself collapses. Asia or Europe … it does not matter.

    .

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  17. [...] up with commentary on this move, so suffice it to say I’m only scratching the surface here. (GigaOm has a nice starter for opinions outside of the usual tech-blog suspects.) Many Google- and [...]

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  18. [...] up with commentary on this move, so suffice it to say I’m only scratching the surface here. (GigaOm has a nice starter for opinions outside of the usual tech-blog suspects.) Many Google- and [...]

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