The following article is a reprint from Stratfor (subscription required). I am re-posting it here because it illustrates the difficulties that foreign companies have when attempting to make a profit in China. In case you are unaware, on Tuesday, Jan 12, Google threatened to pull out of China if they didn’t start cracking down on a cyberattacks against them that compromised user’s accounts. I will get into that in a future post.
The regulatory forces at work on the likes of google, twitter, facebook and youtube would have to be a lot more intense than on general foreign products that do not have an impact on the information available to chinese citizens.
It seems to me China is going to win for at least the next 10 years or so on controlling the flow of information to it's populace and I wouldnt blame google for realising it's a waste of time.
Of course, there will be a search revolution at some point within China. What shape this will take and whether Google will recognise that opportunity and bend to suit will be alltogether different matters. If Google doesnt do it, someone else likely will.
It will be interesting over the next 50 years to watch how China's approach to censorship changes as they emerge into foreign markets as a dominant player. You would think the current approach to be incompatible with being a global player in the long term.
It's taken China centuries to develop and craft their censorship skills. The Internet must be a pain in the butt for them, but I don't think much is going to change. I blame western countires for this, as they let China get away with so much and turn a blind eye.
Google is faced with the same decision that many before them have faced. I for one will applaud them if they get out.
I've learned a little more about this since my last post on this blog entry.
As it turns out, the search revolution in China is already a done deal - Baidu - Chinese Search, the only NASDAQ 100 listed chinese company, direct ties to chinese politicians, content controlled by the Chinese Govt.
In short, exactly how the Chinese Govt would want it.
With that in place it's always going to be an uphill battle for any company, even Google, to provide search in a western culture style "open" and global manner.
It seems China wants to isolate itself from the emerging trend of global markets while trying to hang on to it's ways of the past.
It will be interesting to see if they put the shoe on the other foot when they want to participate in opportunities the global economy presents to them.