China is by far one of the biggest markets pertaining to online services in the world. It has more than 600 million plus frequent users of this service. Just to bring it to scale, that number exceeds the whole European market itself. This is why China attracts lot of attention from companies that provide internet services- take Google, for example. It is to be noted that Google nearly completely left the Chinese market in the year 2010. Why did this happen, is the main motive of this article. But a question definitely arises that “Why is it that many successful search engines of the world fail in taking over the Chinese market?” Did Google not react appropriately to the competition on this specific market? How much influence does a government have in an open and “free” online world? Such questions have been answered and sufficient insight is given into the reasons for Googles withdrawal from the Chinese market.

Internet Censorship in China

China’s internet censorship is more extensive and advanced than any other nation in the world according to CNN. As of the year 2019, about sixty online restrictions had been created by the Chinese Government. The government blocks website content and goes to the extent of monitoring an individual’s access to the internet. Major internet platforms and messaging services in China comply with the self-censorship mechanism powered by state-of-the-art AI Algorithms.

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Methods such as DNS spoofing, IP address blocking, analysis and filtering of URLs, packet inspecting and resetting of connections are administered on what collectively is called as the “Great Firewall of China”, an apt nickname for the Chinese government’s policy.

Was Google initially attracted to China?

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The biggest cause of attraction for any internet services company towards China lies in the size of its market-600 million people regularly using the internet. It is obvious that Google wished to safeguard its stake in a dynamically growing market of China. Only about half of the population of China is still accessing the internet and Google saw the potential for growth which would in turn enlarge their market outreach. One key reason for the attraction of Google was that it wasn’t doing well in the Asian markets. If it became a huge player in the Chinese market, Google could easily thwart companies like Baidu and consequently take over other foreign markets.

What made Google change its perspective?

The change of perspective took place when Google noticed the increasing intervention of the Chinese government regarding the daily operations of the search engine. Such heavy censorship did not only worsen Google’s service but it was also becoming a contradiction to the values of the company. Due to this intervention, often users could witness the website being slow or down.

It is right to note that Google is not only a search engine but also a medium of transparency that gives access to critical sources to its users. Communism and transparency cannot go hand-in-hand and this is why the growing intervention of Chinese government made it extremely difficult for Google to offer its services. On top of it, Google faced accusations of copyright infringement, unethical advertising and camouflaging human rights which flooded the company with numerous fines and criticism. After gaining about 30% of the market share, Google’s rationality melted down and the only option that it was left with was to drop out of the market with its product in order to avoid further loss of image and money due to unbeatable competition.

Baidu: The Google of China

While Google was preparing to leave the market, at the same time Baidu, another search engine picked up pace and complied with the government in order to implement all the services that Google could provide thus filling the void that Google left behind in the Chinese market. Today Baidu is termed as the “no. 1 search engine in China” and controls a whopping 76.05% of China’s market share.

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 Baidu could successfully implement various services successfully including a copy of “Google Maps”, message boards, social network and company directories. Baidu was able to show more market understanding and the best example to suit this was the accuracy of their search results. It understood the market cultural knowledge by implementing search results keeping in mind the Chinese preferences. It is important to note how complex Chinese language is. Baidu complied with Chinese policies and it completely censors its users from visiting “wrong” websites.

If Google wants  to re-enter, how will it overcome Baidu’s advantages?

Regarding the market of search engines and related online services, Google stands no chance in competing with Baidu until and unless the character of Chinese government policies and their jurisdiction changes. The only way they can strike back in the market is by shifting focus on other segments by building dependencies and creating needs. That is the reason that Google is now focusing on their mobile products like Android. But as far as the search engine market is concerned, it is a lost property for Google until the political and judicial environment does not change.

End Notes

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The case of Google in China shows that even huge companies and world leaders of the market are not always in the position to come along the way that they do business. Sometimes it is better to keep morals and the value of freedom of speech and information ranked to the top. A company abiding by these points should never cooperate with oppressing governments in order to be economically successful. This whole episode shows that cultural differences can create barriers for normally homogenous business models. Google failed here by not formulating the culture centric model in China. It also illustrates that complex markets need adaptive, innovative and flexible models to stand in competition and lead the market- something where Baidu excelled

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