CASE STUDY – Google, Inc in China
Google has implemented an aggressive strategy that seeks to duplicate its search engine success in the People’s Republic of China. The rapidly growing economy in China has presented a promising opportunity for Google to expand its search marking business the world’s largest population. However, China has strict censorship rules that filter much of the web content that is available on the Internet. The case study focuses on the challenges that Google must overcome in order to be successful in this emerging economy.
About this Essay
Student: Adam DeRosa.
Course: Econ 102
About: Case Study of Google’s Operations in China
Legal, Cultural, and Ethical Challenges
Internet based companies face a wide range of hurdles when attempting to expand into China. Google learned this first hand when it was required to censor its search engine result pages that were displayed in Chinese territory. Since it was founded, the company has maintained a high ethical standard on search results by providing users with unbiased algorithm-driven content. The legal system in China requires that Internet companies remain transparent and provide access to the information that is being delivered to end-users. Officials in China have the ability to limit web content that is deemed negative to the government.
Google was ultimately left with two choices regarding operations in China – either censor the results in-house, or let the Chinese government censor the results. The corporate motto of Google is “Don’t be Evil”, which refers to a commitment to offer technology that is not manipulated by human biases. In an effort to deliver better service to Chinese customers, Google decided to censor the results. Although this choice goes against their corporate values, it was a necessary step to deliver high quality search results to customers. Censoring the search results in advance allows the search engine to provide faster service. Also, Google made an effort to educate their customers about censorship in advance, which is a choice that reflects the high ethical standards of the company (Hill 2009).
Roles of the Host Government
The role of the Chinese government in regulating Internet activity is far more elaborate when compared to the United States. Freedom of speech and freedom of the press are not considered inherent rights in the People’s Republic of China. Therefore, the country makes a strong effort to eliminate any web content that speaks negatively about the government or its policies. However, the government is also very inviting to foreign businesses that can help increase the prosperity of the growing economy. Google’s powerful technological advancements are something that the Chinese government could use to increase economic growth. It is essential for the two parties to develop a strong relationship that is mutually beneficial. Google must invest heavily in developing new technology for the Chinese market and it must maintain positive relations with the host country to ensue long-term success.
Summary of Strategic and Operational Challenges
Any global business is bound to face a variety of strategic and operational challenges when expanding into a new foreign market. Google has a very complex collection of technology that must be tailored specifically for use by Chinese customers. Dealing with censorship requirements will create additional operating costs when compared to domestic operations. Google developed a physical operations center in Chinese territory to address the censorship challenges and build a product that can serve faster search results.
The company must also consider the competing search engines in the Chinese market, such as Baidu.com (Thompson, 2006). Domestic search companies have a competitive advantage when it comes to understanding the needs to their target customer base. Google will be required to perform a great deal of research to develop a product that will be welcomed by the Chinese people. The choice to set up a physical location in the country will help the Google become more competitive in the market.
In summary, the case study of Google in China provides an excellent example of the challenges that are faced by multinational firms. Internet technology is relatively new to the global economy and has experienced a unique set of challenges. In order to tap into the large Chinese market, Google was forced to stray from its traditional corporate values. However, the decision to be transparent about censorship tactics showed that company had very little flexibility in this matter. Google has able to overcome the challenges of international expansion and has developed a strong presence in the Chinese search market.
Hill, C.W.L. (2009). International Business. Competing in the Global Marketplace. Chapter 4 Case Study: Google In China.
Thompson, C. (2006). Google’s China problem (and China’s Google problem). The New York Times, 23.
Show MoreGOOGLE IN CHINA CASE STUDY
Currently Google faces major issues regarding its operation in China. Google has been faced with the decision to comply with Chinese government regulation and censor its search engine results or take on the human rights approach of freedom of speech and eliminate censorship of searched terms. This paper will examine the case study, Google in China, and answer the following questions: What advantages and disadvantages does Google have in the Chinese market in comparison with Baidu? What is the business model of each company? And what factors should Google have considered in reaching its decision on the new approach in China?
What advantages and disadvantages does Google have in the Chinese market…show more content…
What is the business model of each company?
The appeal that has brought Google such success is its simplicity. The search engine is very user friendly; it is this simplicity that has made it the number one search engine in the world (Google vs. Baidu, n.d., “Abstract”, para. 1). This has made the company very popular among other companies wishing to pursue online advertising. By using its AdWords and AdSense technologies the company has been able to capture a large share of companies wishing to advertise online. The opportunity to buy advertising through Google is sought after because Google has the ability to target very specific markets of people. Google’s well-known success has made its company’s shares very favourable. It is these business and revenue models that have helped Google become the number one search engine in the world.
Baidu’s business model is based on tailoring its search engine to meet the needs and preferences of the people living in China. The company makes its revenue from “[its] online marketing services [which include] a pay-for-performance (P4P) platform and tailored solutions”, it was also the first company in China to use this method, and therefore attractive in the eyes of its customers (Yin & Yulin, 2010, p. 4). Baidu captured the Chinese market “because it was cost-effective and measurable” (Yin & Yulin, 2010, p. 4).
What factors should Google have considered in reaching its decision on the new approach in