Google in China

There is no question that Google’s presence in China could bring substantial growth and revenue to the company; however, will it ultimately be worth the risk of compromising their core values and dealing with these unpopular censorship conditions? Question #1: For Google in 2005, from a business perspective, what are the arguments for and against entering China? When business transactions take place across international borders, they carry additional risks not present in domestic transactions. Foreign Direct Investment is the most risk bearing way of entering into a market.

A foreign direct investment entails sole responsibility to the proprietor. From a political and economic standpoint, the CCP, Chinese Communist Party, has been known as an autocratic party that has imposed strict control over the country (Lawrence & Weber, 2010, p 470). Within the past thirty years, the CCP allowed for the free flow of money while maintaining a tight control of all institutions. With the imposing regulations of the censorship regime by the CCP, Google will be put in a position in which it will need to carefully monitor these censorship laws.

The CCP will intervene by imposing through a multitude of ways to protect the nation, which may cause many delays for Google in China. From a financial aspect, when entering into a foreign market, the risks are tenfold. There will be a higher resource commitment from Google and if there are any potential problems with the CCP, the exit costs would be very significant in a direct investment. Google must also overcome its cultural differences when introducing its product/service into China. Internet giant Google’s success relies on its users’ freedom to search for whatever they like, whether news, email, chat, video or games and entertainment.

However, in China, censorship laws pose a serious threat to Google’s business model. Subjects that do not follow the Chinese government’s political stance, or are of pornographic nature, are blocked from access entirely. The argument for Google entering China is all about numbers; China’s enormous population makes it the world’s largest internet market, an almost bottomless pool of customers, eager to buy the products and use the services that, as of just a few short years ago, were out of reach for many. With the popularity of internet cafes (Lawrence & Weber, 2010, p. 71) and increasing internet users, Google can have great success in China, thus satisfying its market stakeholder’s interests (Lawrence & Weber, 2011, p. 8). . However, Google’s entry into China could be seen by many as a demonstration of how companies are willing to bend to be able to build a business in one of the world’s fastest growing economies. For Google who declared one of its core values: “to organize the world’s information and make it universally accessible and useful (Lawrence & Weber 2011, p 469),” to actually bring this to pass in China would be a challenge.

From a business perspective, the argument against Google entering China is Google’s head-to-head conflict with the Chinese government. Censorship has always been seen as the “price to pay” for doing business in China for internet companies such as Google, Yahoo and Microsoft. Another argument against Google’s move into China would be the competition; especially the Chinese internet provider, Baidu (Lawrence & Weber, 2011, p. 467). Baidu’s popularity and business success has been linked to its compliance with the Chinese government. Question 2 From an ethical perspective, what are the arguments for and against entering China?

The ethical perspective of why or why not Google should enter China is complicated by the theory of Ethical Relativism which is based on the idea that “ethical principles should be defined by periods of time in history and a society’s traditions during that time period (Lawrence & Weber, 2011, p. 72). Considering the ethical climate in China in 2005, Google’s decision to enter can be considered unethical because Google’s market and nonmarket stakeholders will believe that Google failed to provide its customers with the product it provides elsewhere due to China’s censorship policies.

Google will also disappoint stakeholders who support the company based on their motto of “Don’t Be Evil. ” Entering China and allowing censorship could have a negative impact on Google’s global image and thus hurt business performance. Google’s entry is also considered unethical because the company will have failed to minimize or prevent harm to the general Chinese public who are now at risk for prosecution and imprisonment when their search patterns are turned over to the Chinese government.

Finally, Google’s decision to enter China under censorship and these conditions fails to promote personal morality within the company. The other side of the argument is that Google would be acting unethically by not entering China because Google’s stakeholder customers in China will be deprived of any of Google’s services, and Google stockholders will be hurt by Google’s failure to enter the rapidly growing, and possibly lucrative, Chinese search market.

Google’s failure to enter such a rapidly growing market would fail to maximize business performance. Additionally, from a Chinese ethical perspective, Google would be acting ethically by complying with legal requirements and thus preventing the Chinese people from engaging in subversive activity on the internet which could lead to prosecution of Chinese dissidents (Lawrence & Weber, 2011, p. 475). This is a complex case with varying ethical perspectives, each with its own merits and compelling arguments.

Question 3 If Google enters China, how can it do so while mitigating adverse ethical impacts? In answering this question, please formulate possible options and evaluate their strengths and weaknesses. Entering China has vast implications to Google: China has the second largest economy as measured by purchasing power (Lawrence & Weber, 2011, p. 471) and the second largest number of internet users (Lawrence & Weber, 2011, p. 471).

Half of Google’s user traffic is now coming from abroad (Lawrence & Weber, 2011, p. 469) and its foreign advertising is increasing. Entering China would pose ethical dilemmas to Google, based on the company’s core values (“to organize the world’s information and make it universally accessible and useful”; Lawrence & Weber, 2011, p. 469) and code of conduct (“usefulness, honesty, and responsiveness…. ” and “respect, avoidance of conflicts of interest, confidentiality, …”; Lawrence & Weber, 2011, p. 470).