Google’s announcement that it would stop censoring online searches in China and consider pulling out of the country was not simply remarkable for the way it dispensed with the standard corporate communications script for foreign entities operating in China: It was remarkable for the silence with which it was greeted.
A patently ridiculous Foreign Ministry statement merely noted that China’s internet is "open," while coverage in the state-controlled media insisted that Google’s decision was a business one and had little to do with the vast amount of internet filtering that everyone knows does go on. The line was: Google’s business model isn’t working; Google doesn’t understand Chinese culture; the vast majority of Chinese internet users support a robust response to Google’s antics.
But the US internet company’s move – almost unprecedented in a country where, as one internet commentator put it, foreign firms are "deferential to the authorities to the point of obsequiousness" – has left Beijing in a tricky position. The government doesn’t want to be pushed around on a sensitive policy issue, but an overly harsh response would create untold PR damage both internationally and with the millions of young middle-class Chinese people who see Google applications as part of their lives.
Other foreign firms in China are watching the standoff with interest as its ripples may be felt beyond the realm of the internet. Anecdotal evidence suggests that the way in which foreign businesses are being regulated has been tightened in some significant ways over the past year, particularly in industries where China has developed a competitive edge.
This is not in itself surprising. China’s rationale for encouraging foreign investment is the opportunities it created for transferring technology and expertise. Companies that came to China expecting anything else were simply fooling themselves. As their perceived utility to China fades, foreign firms can expect the same to happen to policies encouraging their business here.
Google’s situation, however, is peculiar. Unlike a foreign manufacturer of wind turbines, it supplies a product – information – for which there is infinite demand in an industry that is defined by its barriers to the rest of the world. And unlike wind turbines, Beijing is not interested in duplicating Google’s unfiltered product domestically.
Google’s success confounds those who argue that China’s internet users have no need for a foreign-based search engine. Its decision to stop censoring results and threaten to leave the country confounds those who believe the ultimate goal of foreign firms is success in China regardless of the price.
Confounding the issue, however, does little to hide the fact that the odds are stacked against Google as the unwanted foreign presence. How the situation plays out – compromise or withdrawal – is anyone’s guess, but Beijing’s silence will not last forever. It is a watershed moment and the world is watching closely.