Google in China – Business Decision?

Google’s announcement risking to quit China is controversial in nature. Not only in China, but also in the States, even in the high-tech camp, Microsoft, and Yahoo! hold different opinions.In fact, it is people’s reaction to this news that shocks many people, in both camp. Let me add my observation by starting from the easiest question:

“Is Google’s announcement about its China operation a business decision, or not?”

The critics about Google’s action that occupied the dominating position in Chinese (government approved) media is, it is all about money, and Google is mixing business with politics… In short, Bad! Ugly!

The argument is about Google’s motivation to do it. As a basic rule, when we argue, we should not focus on the motivation, since it can never be proved. It leads the discussion to nowhere. I neither suspect their motivation to be “its high moral standard” nor “evil anti-China blah/blah/blah”.

(If you ask me to guess, as a Google fans, I think it is the first part, but… Ops! Can we change a topic because the debate about motivation is not productive).

If it were a pure business decision

If it were purely a business decision, what is the right thing for Google to do? Jun made a public statement that “It is the most stupid thing Google did in history, by giving up half of the world” (source). With all the due respect, I don’t agree.

Let me share the The Ford Pinto Case (via Michael Sandel’s presentation)

Ford Pinto Case

Ford, as a company, learned that a defective design in its Pinto’s fuel system can cause death in accidents. But the cost to replace all the 10+ million car parts is significantly higher than just let the accident happen, and pay the victim the money ($137 million versus the $49.5 million price tag put on the death, injury, and car damage). If we don’t value people’s life, the decision is pretty simple and straight forward. 137 is bigger than 49.5, isn’t it?

The result is obvious. When the cost/benefit analysis of Ford exposes to the public sight, Ford was under huge pressure, and was forced to change the design, and also, that case deeply impacted the history of safety regulation in the auto industry since then.

With this case, we can easily understand why a small risk in toys sold in IKEA that caused no injure or death needs to be corrected, at the cost of millions of such toys be recalled and changed. Now it is the legal requires and moral common sense that safety should be placed before any business interest.

Trust as an Assert

Continuing to discuss on the Ford’s case. The mistake they made… (well, who are we to judge that they made a mistake many years ago? Well. That is the one big step forward on the moral standard, or civilization by millions of people’s efforts, and, sorry, many people’s life).

The mistake they made… is to assign zero dollar value for people’s life in the cost/benefit analysis. The other mistake is, they didn’t assign the value of the brand image as a safe car into the equation.

Google’s Case as a Business Decision

Let’s get back to the Google’s case and do a similar cost/benefit analysis. On the benefit side, there are 600 million USD annual revenue, and potentially, 10x of it in 5 years. On the cost side, is the safety of its data (“Take it easy. No one get killed”. No! Reminder Yahoo!’s case about the two journalists who are still in jail?), and the universal principle of free information and speech.

Different people assign different value on the cost factor in the equation. Some put $0, and others put billions… The decision reflects the decision maker’s valuation of what many people valued very low. Can this action be converted into asserts of the company? Sure!

Hmmm… I mean “yes”, in places where people value freedom of speech, human rights, privacy, and integrate, not in other places.


Even if it were a pure business decision, I see value that makes perfect business sense. I am trying to take the chance to talk more about this in the series later, about the Chinese modern moral standards and the long history of ambiguity of the standard.

16 thoughts on “Google in China – Business Decision?

  1. “The critics about Google’s action that occupied the dominating position in Chinese (government approved) media is, it is all about money, and Google is mixing business with politics… In short, Bad! Ugly!”

    Accusing others of ‘mixing xxxxxx with politics’ seems like the official media’s favourite response whenever somebody’s (often foreign governments or companies) actions cause loss of face for the Chinese government. They fail to realise that they are actually the ones who are most keen to politicise just about anything.

    It’s just another tactic used by the government to try to divert everybody’s attention from the reality of heavy censorship on official media and internet.

  2. Marc Faber: A China Bust Is Coming

    China bubble will not burst right away: Marc Faber

    Published on January 15, 2010 at 13:15

    LONDON (Commodity Online): Is the Chinese economy is on a bubble? The China bubble is a subject passionately under discussion among business leaders, economic experts, commodity analysts and investors.

    Leading investment pundits have been coming out with their predictions on whether China is sitting in a bubble economy or not. Short-sell veteran Jim Chanos recently said that China is another Dubai, sitting in a precarious excess credit circle. Since excessive credit in China is ballooning, it might burst soon, Chanos predicted.

    Many investors have panicked ever since Chanos’ forecast that China will crash under unbridled growth without economic fundamentals. A crash in China would mean that commodities markets-the main driver of the Chinese economy-will collapse.

    Global commodities investment guru Jim Rogers, who has been a passionate investor in the Chinese market, has hit back saying Chanos does not know the fundamentals of the economy in China. Rogers further blasted Chanos saying people like him who did not know to pronounce the word China some years back are now experts on the Chinese economy.

    While Rogers and Chanos are warring on China, let us look at what is another celebrated commentator-Marc Faber-has to say on the China bubble. Faber, publisher of the Gloom, Bloom, Doom report almost agrees with Chanos on the China bubble forecast, not with Jim Rogers.

    Faber agrees with Chanos that China is caught in several serious economic problems. He says: “There is excessive credit in China, but the oversupply of money has been used to build the infrastructure, education, and R&D, rather than consumed. And that is the difference between China and US.”

    Faber is concerned about the bubble burst syndrome in China. But unlike Chanos, Faber does not see the Chinese bubble bursting so soon. “The China bubble will not burst soon. I don’t see it imminent.”

    “It is very difficult to pinpoint a day when China will implode, I don’t think it will happen right way,” Faber added.

    China has, indeed, been the fastest growing economy in the 2000-2009 period. There has been a boom in commodities production and consumption in China. China has overtaken several countries including India, US, Australia and South Africa in the consumption and production of several commodities including base metals and bullion.

    There has been a flood of bank lending in China that has been boosting the Chinese appetite for manufacturing, gold mining, agriculture, farming etc. But is it all over?

    Let us wait and watch who will be right in the Chinese bubble forecast: Jim Rogers, Jim Chanos or Marc Faber.

  3. Jim, Those are absolutely worthless predictions and they are as good as puffs of air. There is no economy growing in a straight line. If they can not tell you (roughly) when and by how much the bubble will burst, then how can they ever be wrong?

    Mount Rainier is duo for another eruption. It could happen one day from now or it could happen one hundred years from now. When should the near by residence move out its way?

  4. GOOGLE的底裤被操了

    人都有自尊,我发现,就连GOOGLE都有自尊。 GOOGLE对自己建立起了一些原则性的东西,比如说不作恶。现在,按照当前流行的中国人的想法,似乎很难将道德与实利作了一了断,就是一个人作人的原则究竟能经受得起多大的考验,是个问题。瞧!我刚说GOOGEL也有自尊。它的不作恶原则就是一种自尊的表现,你甚至可以认为,这是发达的美国社会对,社会人群基本的价值观念的作用导致了GOOGLE产生了这种自尊。就好像动物保护者组织,环境保护者组织。但在中国来说,连自己的饭碗都成问题的时候,环境不环境,动物不动物谁还会管那些。所以,从一定程度上来说道德也跟金钱有关。

    GOOGLE是家有自尊的公司,但是这家有自尊的公司来到中国以后,为了适应中国的互联网环境,不得不放下这个自尊。我不知道,这个是否可以称之为能屈能伸。按GOOGLE的话说,就是为了中国网民而同意其阉割版引擎的出现。接下来就是GOOGLE的本土化问题,就像美国的可乐一样,当初,美国人发明可乐的时候并未有想到是以中国人的品味为依据而量身定作的,可乐的发明压根就没有顾及过中国人的感受。但是,可乐在90年代,那种饮料不同的时代,来到中国后风麾一时。以前,能喝得上一罐可乐是件很爽快的事。可是现在呢,这些外企公司反过来,要以中国人的品味为标准搞什么新饮料产品。其结果并不令中国人买帐。所以GOOGLE也是,本来GOOGLE以自己的原则在美国作得好好的,到了中国为了所谓的本土化反而还要像中国企业学习。所以我说GOOGLE忘记了它的初衷,如果你GOOGLE来到中国和那些垃圾的互联网企业一样,那么试问,要你来干吗?中国互联网已经有无数的垃圾公司了,还数得了你一家 GOOGLE来瞎参和吗?因此,GOOGLE说自己如果不能恢复到恢复到原来的自己宁可退出中国市场,也是有道理的。不然的话,GOOGLE来到中国就会因放下自尊,自己的原则,而被别人是看在钱的份上来中国的。那么,读者也许会说,哪家商业公司不是为了钱的,是的,我承认,但是,我刚才说过,GOOGLE是一家有自尊的公司,君子之财取之有道。同样是赚钱,但是有作坏事赚钱的,也有作好事赚钱的。而当你赚钱的项目违被了你的原则,违背了你当初提供服务的初衷时,试问,你还有原则吗?那么,我们来看看GOOGLE的原则是什么。



  5. Let me see, in order to get into a market one has to relinquish to his principles, suffer constants campaigns against once established in the country and finally suffer and insider attack, quite probably government backed, which risk to jeopardize one’s entire business and IP.

    Yes, it is a business decision, maybe even the best one given the circumstances.

  6. Baidu may get China’s market, but Google will have the World! (and maybe even solar system)

  7. I think the government’s attempt at branding the Google incident as “another White House’s conspiracy” is pretty damn stupid and illogical as usual. Sadly you still get a lot of people buying into this, siding with the government seeming to reject the idea that they deserve uncensored internet. Like I said before, once the government starts its propaganda machine, a mere commercial matter is politicised, not by anyone else but by the Chinese government itself, who seems to hate ‘politicalisation’ of any kind.

  8. The different reactions from MS vs Yahoo… I think it has something to do with the nature of the service each company provide. Google and Yahoo are information “providers”… MS is not.

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  11. And now the china has kick out the google

    I think

    I was listened about this some months ago !

    currency rates

  12. Well, this is a very complicated question. On the one hand there is busines and profits, but on the other hand there are principles which are violated. I think as google is a company that represents a lot of shareholders and they are interested in profit first of all, they will agree to all conditions not to lose any cent. I’ve seen a documentary about Goggle (found it at torrent SE ). Well, it is a great company and in any case I hope it will exist for many years.

  13. Google as a whole is obviously a worldwide corporation that has more resources than nearly anybody. That said, I believe that they are able to make wise choices. Whether those choices are made under the right circumstances are to be determined. China is such a large entity that they require attention unlike most other markets. I think Google will make make the right choices under these circumstances.



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