Harvard Case - Google out of China
"Google out of China" Harvard business case study is written by David P. Baron. It deals with the challenges in the field of Business & Government Relations. The case study is 6 page(s) long and it was first published on : Jan 1, 2010
At Fern Fort University, we recommend Google adopt a multi-pronged strategy to re-enter the Chinese market. This strategy should prioritize long-term sustainability and strategic partnerships while navigating the complex political and regulatory landscape. This approach involves a phased re-entry, focusing on non-controversial services and building trust with the Chinese government and public.
2. Background
The case study 'Google Out of China' details Google's tumultuous exit from the Chinese market in 2010 due to censorship demands and cyberattacks. The company faced a choice between adhering to Chinese government regulations, which would have compromised its core values of freedom of information and user privacy, or withdrawing from the world's largest internet market. Google opted for the latter, leading to a significant loss of market share and revenue.
The main protagonists are Google, the Chinese government, and Chinese internet users. The case highlights the tension between globalization and national sovereignty, particularly in the context of emerging markets like China.
3. Analysis of the Case Study
This case study can be analyzed through the lens of competitive strategy, international business, and corporate social responsibility.
Competitive Strategy: Google's decision to withdraw from China was a strategic retreat in the face of an unfavorable competitive environment. The Chinese government's censorship policies and the rise of local competitors like Baidu and Tencent created a challenging landscape for Google.
International Business: The case highlights the complexities of operating in a foreign market with vastly different regulatory frameworks and cultural norms. Google's failure to adapt to the Chinese context and its unwillingness to compromise its principles led to its withdrawal.
Corporate Social Responsibility: Google's decision to prioritize its values over profits raises ethical questions about corporate responsibility in a globalized world. The company's stance on freedom of information and user privacy resonated with many users but ultimately proved unsustainable in the Chinese market.
4. Recommendations
Phase 1: Strategic Partnerships and Non-Controversial Services
- Focus on Cloud Services: Google should initially focus on offering its cloud computing services, Google Cloud Platform (GCP), to Chinese businesses. GCP offers a range of services that are less sensitive to censorship concerns and can cater to the growing demand for cloud infrastructure in China.
- Partnerships with Chinese Companies: Google should partner with reputable Chinese companies to leverage their local expertise and navigate the regulatory landscape. These partnerships can be in the form of joint ventures, technology licensing agreements, or strategic alliances.
- Compliance with Regulations: Google must demonstrate its commitment to complying with Chinese laws and regulations, including data localization requirements and censorship rules. This can be achieved through transparent communication, proactive engagement with regulators, and establishing a dedicated team to ensure compliance.
Phase 2: Gradual Expansion and User Trust Building
- Introduce Non-Controversial Services: Once Google has established a strong foothold in the cloud market, it can gradually introduce other non-controversial services like Google Maps, YouTube (with limited content), and Google Play Store.
- Invest in Research and Development: Google should invest in research and development tailored to the Chinese market, including developing localized products and services that address specific user needs and preferences.
- Community Engagement: Google should engage with the Chinese community through social media platforms, local events, and partnerships with non-governmental organizations (NGOs) to build trust and understanding.
Phase 3: Advocacy for Open Internet
- Engage in Dialogue with the Government: Google should engage in constructive dialogue with the Chinese government to advocate for a more open and free internet environment. This can be achieved through lobbying efforts, public statements, and collaborations with international organizations.
- Support Local Initiatives: Google can support local initiatives that promote digital literacy, internet freedom, and innovation. This can include funding scholarships, supporting independent media, and promoting open-source software development.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Mission: Google's core competency lies in technology and innovation. The proposed strategy leverages these strengths by focusing on cloud services and research and development. This approach also aligns with Google's mission to organize the world's information and make it universally accessible and useful.
- External Customers and Internal Clients: The strategy caters to the needs of Chinese businesses and consumers by providing them with access to Google's innovative services. It also addresses the concerns of internal clients, such as engineers and developers, by offering them opportunities to work in the Chinese market.
- Competitors: The strategy acknowledges the presence of strong local competitors like Baidu and Tencent. By focusing on niche markets and building strategic partnerships, Google can differentiate itself and gain a foothold in the Chinese market.
- Attractiveness: The strategy is attractive in terms of long-term growth potential and profitability. The Chinese market offers significant opportunities for Google, and the proposed phased approach minimizes risk and maximizes chances of success.
6. Conclusion
Google's re-entry into the Chinese market presents both challenges and opportunities. By adopting a strategic approach that balances its core values with the realities of the Chinese market, Google can achieve long-term success while contributing to a more open and innovative digital environment in China.
7. Discussion
Alternatives:
- Complete withdrawal: This option would minimize risk but also eliminate potential for growth in the world's largest internet market.
- Full compliance with censorship demands: This option would allow Google to re-enter the market quickly but would compromise its principles and alienate users.
Risks:
- Regulatory uncertainty: The Chinese government's policies are subject to change, which could impact Google's operations.
- Competition from local players: Chinese companies have a strong foothold in the market and may be difficult to compete with.
- Public backlash: Google's past actions in China may lead to negative public sentiment.
Key Assumptions:
- The Chinese government will continue to prioritize economic growth and technological development.
- Chinese consumers will be receptive to Google's services.
- Google will be able to navigate the complex regulatory landscape and build strong partnerships.
8. Next Steps
- Establish a dedicated China team: This team will be responsible for developing and implementing the re-entry strategy.
- Conduct market research: This will help Google understand the Chinese market and identify opportunities for growth.
- Engage with the Chinese government: This will help Google build relationships and understand the regulatory environment.
- Develop a phased re-entry plan: This plan will outline the steps Google will take to re-enter the Chinese market.
- Monitor progress and adjust the strategy as needed.
This phased approach, prioritizing partnerships, compliance, and non-controversial services, offers a path for Google to re-enter the Chinese market while adhering to its core values. It acknowledges the complex political and regulatory landscape while focusing on long-term sustainability and strategic partnerships.
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Case Description
Despite concerns about censorship and putting users in jeopardy, Google decided to launch Google.cn in 2006. Google stated that it would monitor conditions in China and even reconsider its approach to China if warranted. Three years later, in December 2009, Google detected an extensive and sophisticated cyber attack that targeted companies and specific employees within the companies. Google investigated the attack and announced that it would change its approach in China. Google would no longer censor results in China and acknowledged that this move might result in shutting down Google.cn. It then moved its search business to Hong Kong to outside the great firewall. This case explores the ethical dilemmas raised by Google's foray into the Chinese market while trying to adhere to its motto of "Don't Be Evil." The case also identifies the market consequences of its decision to withdraw from China and the reactions of its competitors and Chinese firms with which it had been working.
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