Gates on Google

We were all curious on the new tenant. Only the affluent can afford this prime real estate. Yet this new company was clearly beyond the most affluent of us. They leased the whole building, gutted the entire interior, brought in office furniture from the US (this is China, they make stuff here), and devoted an entire floor to a gym and a cafeteria (there is a gym not 100 meters away and the area is teeming with great cheap restaurants). In addition, they installed a neon sign on the top, something we all wanted but couldn’t for years. Flaunting their wealth and influence, who were they?

The sign eventually came up, bright and colorful. It said, “Google.” That was 2006.

Soon, we met them in social settings. Over a dinner, one casually mentioned that he risked being arrested coming to work everyday. “Why would you want to do it here then?” we wondered. Most MNC (Multi-National Corporation) had the policy of obeying all local laws. “Well, we don’t feel their laws are right.” His answer stunned the whole table. We changed the topic and moved on, wondering how long would they last in this jungle. Whatever Google’s objections are today, they knew all about them in 2006. Dr. Li KaiFu’s entrance was spectacular then. Their flamboyant protest is an admission of an equally spetacular business failure.

There have been many books, blogs, war stories, and urban legends on how western companies flamed up in China. They came with superiority, righteousness, and money; they expected to conquer quickly, like how they did in the Opium War. Anything different will be ridiculous, stupid, wrong, and must be changed. In a couple of years, they would have closed down shops, fired everyone, desert their fixed assets, and went back home like the VietNam War. It is impossible, they said, to work with those abstruse Chinese. Why can’t they enforce good laws, abolish censorship, respect human rights, drive nicely, pollute less, float exchange rate, and speak English better? We cannot win because they did not play by the rules.

China, the largest Internet and mobile computing market in the world, is unlikely to hurt from Google’s exit from the country. Many will devour Google’s market share quickly, in search, email, or cell phone handset. This dominant giant in the rest of the world is a small player in China. They couldn’t comprehend or accept their inability to gain market share here. They had the superiority, talents, and money. They also have founders and senior management who insisted on playing by their rules, instead of adopting to China’s.

“One may or may not agree with the laws in China, but nearly all countries have some controversial laws or policies, including the United States,” Bill Gates said. “Now, if Google ever chooses to pull out of the United States, then I’d give them credit.”