I woke up today to the headline that Google is threatening to leave the China market in response to what it says were a series of attacks aimed at the Gmail accounts of human rights activists.

First, I must admit that I am a big fan and heavy user of Google's services.  Our company uses many Google services on a daily basis and I hold Google stock. However, today's move, smells strongly of a brilliantly crafted marketing ploy generate PR or perhaps even a way to leave the China market without admitting failure.

My first reaction was along the lines of this twitterer.  Finally, someone is willing to take a stand against injustice and the hassle China makes foreign businesses go through. However, after reading some additional coverage, watching Larry Kudlow's interview of Google's Chief Legal Officer on CNBC and discussing this news item with people both in and out of China, it became apparent that my initial impression may have been incorrect.

In fact, today's announcement seems to indicate Google has learned a lot more about China and Chinese culture from its China experiment than others give them credit.

Google's China Lessons

  1. One of the quickest ways to gain popularity among the masses is to be banned
  2. Find a way to save face when confronted with defeat

The Marketing Allure of Forbidden Fruit

Google has learned what many other successful Chinese businesses, artists, authors and musician long since known. One of the best ways to get your product to become extraordinarily popular is to get it banned by the government.  Books like Shanghai Baby and the extraordinarily popular TV drama Woju(蜗居which details the story of a young girl who became the mistress of a corrupt Communist Party official were partially or completely banned and consequently soared in popularity.

In the short term, today's news will without a doubt cause many who would typically just use Baidu to give Google China another try simply to see what all the fuss is about it. In the long term, if Google makes good on its threat, Google.cn is shut and the US-based Google.com is subsequently blocked,  you can be sure more people than ever in Mainland China will be use ever more creative ways to access the US-based search engine and other Google services to see what is being hidden from them.

Failure in the Chinese Market

Despite Google's popularity abroad, outside of Google of China's IT industry, very few Chinese use Google services.  Among my 100s of contacts in Mainland China, ranging from those in high government and Party positions to simple uneducated workers from the countryside who use email, I can count on one hand the number that use Google's Gmail service.  Among those, all except for one are people who have lived and/or studied outside of China at some point. Besides a few users of Yahoo China's email service, the remainder use one of the home-grown email providers such as 163.com or the built-in @qq.com email with which, every user of insanely popular, homegrown QQ chat network is provided..

Language provides a lot of insight into Google's position in various markets. Much like "google" used as a verb has made its way into English vocabulary as a word to mean "to use Google to search the web for something," Baidu plays a similar role in Chinese.  Their slogan Baidu Yixia, Ni Jiu Zhidao (百度一下,你就知道) which means "Baidu a little bit and you'll know" is one of the better know corporate slogans in China up there with McDonald's "I'm Loving It."

Some of Google's services do not even work properly in China through no fault of the Chinese Government.  For example, the map view of Google Maps on the iPhone is consistently about 3 kilometers off in Guangzhou when displaying current location despite the fact that the satellite view is dead on. This makes Google Apps essentially useless for finding or following directions in South China. It is as if no one from Google has ever tested this product in Guangzhou despite the fact that this is arguably Mainland China's most important city in the southern half of the country.

Google China's much touted music download service created to compete with the extremely popular, easy to use and very useful Baidu MP3 service which allows users to download MP3s of the latest music for free has never worked from our China Unicom leased line in Guangzhou with their music supplier's servers always indicating that our IP block did not have permission to access the music files required to use the site.  This may have been because Google was trying to err on the side of caution when setting up IP access parameters to in order to avoid allowing free downloads of music outside the Mainland China market and incurring the wrath of their music label partners. However, the reality of the situation is that if it didn't work for me on 1 of my 2 internet connections in Mainland China, then there were probably many others who had the same problem. Like me, they probably tried the service once or twice, ran into a problem and then gave up and went back to Baidu MP3.

For most companies, a user base of Google's size in Mainland China would be considered a success.  But the fact of the matter is, Google's wild success and huge market share in other countries around the world means that in comparison Google's China operation with its tiny market share and near irrelevance to the daily life of normal Chinese makes it a large failure.

In their battle to win market acceptance and work towards the market share numbers they enjoy in other markets, Google has had to re-develop most of their services specifically for the Mainland Chinese market to cater to different customer tastes and comply with a significantly different regulatory environment.  The result of doing so has been a less than tepid response from Chinese Internet users.

Saying they are threatening to close down their China operations because of China cyberattacks and government censorship is ingenious at best.  How would shutting down their China operations prevent future cyberattacks from in China on its US-based servers? The answer is that obviously it wouldn't. The government censorship excuse is weak because Internet censorship now is to a large part much less stringent than it was when they entered the China market.  Major foreign news sources have very rarely been blocked in the past year or so unlike in years past when they entered the market.

The only thing that has changed is that Google's China operation has gained a track record of little success over the past several years. They have run numerous campaigns to promote g.cn and google.cn (eg. ads through the Guangzhou Metro, on every bus stop, and many TV stations) with little success. Someone internally has probably decided that their little progress is not worth the cash cost of the China operation and the large PR cost of being seen by some as doing the dirty work of the Chinese Communist Party. So instead of admitting defeat and tarnishing their brand's image of success, they instead have chosen to blame the Chinese government and use this as a face saving way to wrap up a failed operation under the guise of "Doing no evil" and human rights. The only thing better from a PR perspective would be to figure out how to spin the closing of their China operation as being "for the children."

No, Google's threat to leave the China market was not made because of some higher moral calling but instead was a carefully crafted business decision to make one last attempt to generate interest in their China services before throwing in the towel and doing so without hurting the Google brand's image of inevitable success. Look at it in another way...do you think Google would even think about threatening to close down its China operations if it had already cornered 90%+ of a market over 300 million users strong? I don't think so.