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Google's China Misadventure: Not a Harbinger of Darkness

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Today's Washington Post has a headline suggesting that Google's withdrawal from the mainland is a harbinger of much worse to come. It asserts, "China at a Crossroads of Change." And it goes on to warn, "Google's showdown marks turning point in bond between West and Beijing's authoritarian system."

Please. Let's not get overexcited.

This HuffPost entry neither endorses nor criticizes Google's decision to cut its losses in the Middle Kingdom. The company's strength as a brand is driven both by technological innovation and clear values -- freedom of expression, infinite discovery, "doing no evil" -- that strike a deep chord with global netizens. Google's unwillingness to continue compromising its ethical and moral standards by submitting itself to authoritarian censorship laws was probably gut-wrenching, given the enormous size of China's market. And, as an American, it is refreshing to see a corporation stand up for what it believes in.

But Google's stand is unique and will not influence many other investment decisions.

Google's demand that it be allowed to operate an uncensored, non-monitored website was extremely naive. The Chinese authorities, ruthlessly pragmatic, are often open to compromise, albeit negotiated through a prism of acute self-interest.

It's true China has always and will continue to vigorously defend its interests -- as well as promote its "strategic" industry sectors -- and we must anticipate an increasingly mercantile modus operandi. So they're being marginally tougher on foreign business than in the past, but only marginally. The government knows foreign businesses can't be pushed too far, too hard. When it cross a line that discourages investment, it will back off. The Party knows how its bread gets buttered.

The Google case was a Google botch. Google's public condemnation of and demands against censorship touched the third rail of government insecurity. Anything that directly or directly threatens governmental control -- i.e., the ability to frame the debate -- has always been and will always be approached with zero tolerance. Google committed every sin that China 101 warns against and, in the end, did neither the consumers nor their bottom line any favors. The fact that their complaints were released, stridently, in public also caused a massive loss of face, a near-unforgivable sin to any Chinese, government cadre and corproate warrior alike. And, finally, we shouldn't ignore the fact Google knew perfectly well the conditions of maintaining a mainland operation when they entered the market.

Google has repeatedly exhibited a lack of understanding about what makes China business tick. Relative to Baidu, their primary online competitor, they underinvested in a sales force, rather arrogantly assuming a "build it and they will come" mentality, based on competitive advantages on engineering and technological levels. Their tone deafness was even evident when they launched in 2006. Google's name in Chinese translates as "gu ge," or "valley song," hardly a label that connects with ambitious Chinese youth, eager to expand their horizons, liberate their potential and connect with the world.

So what's next? My bet is Google will now fade with nary a whimper. Savvy competitors, both local and multinational (i.e., Microsoft's Bing), will fill the gap. The on-line community will grumble, for a bit, and then get on with their lives, infinitely more "free," both on-line and off, than just five years ago.

The China market is too big, too promising, for other companies -- most not as religious as Google in terms of absolutist promulgation of values within vastly different cultural contexts -- to ignore.