Google to China-Adios, Amigo
The Daily Diatribe:
I love what Google did in China. For those who are not aware, Google decided to abandon its Chinese-language search services hosted on mainland servers. There are many out there who believe that Google erred by choosing to ignore a 1.4 billion person marketplace. I applaud what they did. I heard Jack Welch, the former CEO of General Electric and the mastermind behind six-sigma, say that when you are playing on somebody else’s court, they get to make the rules. I say that’s a lot of bunk. Basketball is basketball whether played in India, France, Africa, China or the United States. While there are some tweaks to the rules, (we call that local rules in golf), everybody agrees on the basics. In fairness, Welch believes that the Chinese behavior has been terrible but it is their football and they get to make the rules. Welch is more concerned about the Rio Tinto case in China. Now, this involves 4 Australian executives of the mining company who are currently on trial in China for espionage.
At the end of the day, I would worry about both. Clearly, the Chinese are still a communist, centrally planned economy, even with all of the free market reforms of the last decade exploding the growth in that country. I think that the Chinese government will eventually figure out that trying to control free markets is a lot like trying to put the rabbit back into the hat. They are not there yet, but rest assured, it will happen. What Google did is to accelerate that.
Here’s the rub. How many other international companies coveting doing business in China will have the intestinal fortitude to pull a Google? I think not many including many of the bigger United States conglomerates. In fact, I think behind every Google, there is some search engine company salivating at the prospect of picking up steam in the Chinese marketplace. The problem is that they will eventually run into the same buzz saw that Google did. Will they have the chops to stand up to the Chinese at the risk of losing billions? I think not.
America made its bones by bold corporate moves. From Ford to Edison, American business history is replete with stories of unconventional market moves that looked profoundly stupid at the time and yet paid off many decades later culminating in huge corporations. Whether it was the Model T and its assembly line or Bill Gate’s garage; America is great when they are completely unpredictable. So, Kudos to Google; at least one American thinks your actions in China are profound and unpredictable.
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