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Wednesday, January 13, 2010

Google’s Chinese Exit: Any Implication in Foreign Investment

In Google’s official blog, you can read this entry to know more about the issue: A new approach to China
According to it, Google in China has suffered various cyber attacks in the recent months. Not only Google but also, another 20 companies were victims of the attacks.
The main goal of these attacks was to hack the Gmail accounts of human right activists in the country. A number of Gmail accounts of human rights activists based in Europe, USA and China have been breached by ‘phishing scams or malwares’. So, Google has advised everyone to be careful about their email accounts. Google has also stated that it won’t from now censor results on Google.cn. So, most likely Chinese government will not agree to this matter and Google will come out of its operations in the country.
Google is a very big company in the US and this decision from the company would surely create a lot of media interest in USA and Europe. It will be interesting to look about the possible implications on foreign investment in China.
At this point of time, the situation in China is a dilemma both for Chinese government and foreign companies like Google. They both need each other. For foreign companies, China is a market of 1 billion people and this is a market they simply cannot ignore. If a large company does it then it will lose the market. In fact, Chinese market has double attraction for any large multinational company. On the one hand, China is itself a market of one billion people. Secondly, it has become the global manufacturing hub because of cheap but skilled workforce.
Chinese government has the same kind of dilemma. On the one hand, it wants to keep its grip on power and keep communist style of ruling intact. On the other hand, it needs foreign companies to invest to create jobs. Otherwise, social unrest will take place. Chinese economy is suffering from economic recession.
As for Google, Chinese government officials are perhaps not that much concerned because China has a search engine of its own. If Google was a car company or any kind of manufacturing company then Chinese government would have been concerned more. 

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