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Does Google’s China Pullout Hide Another Inconvenient Truth?

Over the past few days, the Internet has been abuzz with the news about Google’s decision to redirect traffic to the Google.com.hk site, and stop self-censorship of its Google.cn database. Many in China, the US and other parts of the world have applauded this decision, with some going so far as praising this “values-based” decision.

For many in business, Google’s decision to leave shows further proof that China is an inaccessible market for western businesses, which is to be added to the many annals of other western business failures in China. Many argue that this is proof of the Chinese government’s discriminatory business practices against western businesses, and no matter what they do, it is impossible for them to succeed. (Some of the greatest popularizers of this view are those who have had unsuccessful business experiences in China and then returned to the US.) This argument will gain a large following because it is simple, it doesn’t require much critical thinking and analysis, with the believers of this thought just droning endlessly and thoughtlessly about how China is impossible because of the politics of the nation, and if China was a “free country” then everything would be all right, and Chinese would follow all the rules which all other “normal” human beings all over the rest of the world would follow, and the only barrier is an authoritarian government which relies on censorship and force to stay in power. After all, Google is the leading search provider in most other markets, why is it not able to do the same in China?

This argument is gaining popularity in the west now, especially with economistPaul Krugman’s appeal to take punitive action against China over trade and currency issues.

But what if this is hides an inconvenient truth: that Americans are just not good at doing business in China? While many US Internet businesses have failed in China, including Yahoo!, AOL, eBay China and now Google, there are many Chinese businesses and millionaires which have succeeded in China. Critics say that this is proof that the Chinese government favors its local businesses at the expense of foreigners.

It may come as a surprise to many Americans who routinely see their jobs exported to China, India and other countries, but in many other parts of the world, governments actually believe in supporting their own countries’ businesses and jobs, and exporting jobs is considered bad behavior. In China, one of the quickest ways to get audited by the tax bureau is to lay off workers; the only way to avoid it is to leave China entirely. Now, this is an issue which has nothing to do with authoritarianism and censorship; it is about protecting the business interests of a country and its own citizens.

I have looked at why Chinese Internet businesses succeed, and have found that the number of failures is far larger than successes. The reason there are Chinese Internet billionaires and millionaires is simply because they have no other place to go to. China is their home. Jack Ma, Timothy Chen Tianqiao, Shi Yuzhu and others all went through hard times andn the business equivalent of near-death experiences, but they adjusted to the market and Chinese changing government regulations along the way, and were eventually successful.

Another thing: they did not have someone else at “headquarters” second-guessing every decision they made and deciding the failure or success of their China operations for them based on THEIR personal experiences. They made all their own decisions, both good and bad. And when they made bad ones, they had no other place to fly “home” to.

So next time someone says to you that China is an impossible market for outsiders, just tell them that maybe, just maybe, they have to think and behave less like an outsider, and more like a Chinese.