Infographic by PPC Blog
In a widely misinterpreted move, Google added an ICP license registration notice at the bottom of the search page in China. Many early followers of the Google China saga interpreted this to mean that Google’s application for a new ICP license had been approved by the Beijing authorities, but later Google confirmed that they had not received new information from the Chinese regulatory authorities, which in Google China’s case is the Ministry of Industry and Information Technology.
In a late-day move, Google’s PR department has denied that there has been any update from the Chinese authorities. That raises the question: “If there was no update on status from the Chinese authorities, then why did Google China add the ICP license, even though it did not have it before? And why did they do it without winning renewal from the Chinese authorities? Did they consult with the Chinese authorities before added the ICP license to the page?”
The Google China story is rapidly escalating into one of the great mysteries of the universe right up there with the age of the universe, what are the rules of physics if there were no space and no time, what caused the dinosaurs to become extinct, spontaneous human combustion, who was Jack the Ripper, and can the hole in the Gulf of Mexico be plugged?
In a recent statement, GE’s CEO Jeff Immelt expressed surprise and dismay that the Chinese government and business interests are pursuing moves that will seemingly make the Chinese market less friendly and accessible to western companies. Then, he went one step further, accusing the Chinese of the attempted “colonization” of other countries.
Shortly after making the statement, GE seemed to take a step back from his statement, saying that his remarks were made out of context.
China’s opening up the west and western investment has been predicated on access to the Chinese domestic market in return for the west’s sharing of technology and access to western export markets. Since 1979, this has worked to a large extent: Chinese joint ventures and startups got technology, and Chinese consumers got access to western consumer brands such as Coca-Cola, McDonald’s and KFC. In late 2008 though, the financial crisis forced western consumers to tighten up their spending, and the Chinese government had to quickly motivate Chinese consumers to spend, making up for the excess production capacity opened up by the collapse of western consumer spending. At the same time, Chinese government stimulus packages have driven development in green- and clean-tech technologies, which will be major technology and manufacturing growth areas over this century. China is a leader in the production of the rare earths which are crucial in the development of these new energy sources and has signaled to the west that they should seek alternative sources for materials besides China. Unfortunately, most of this information has not been properly covered in the western media.
To recap, the key technologies of the future are technologies which most western companies did not heavily invest in, and is one which Chinese companies are now leaders, and following 2008, the export markets’ collapse, western imports of Chinese goods have fallen off the cliff. As Europe tightens its belt further to wean itself off excess debt, it’s natural to expect Chinese exports to the EU to be largely anemic. As for the US, one of the few things which all sides seem to agree on is that the country has excess debt, and the problem needs to be addressed somehow.
In light of this situation, the west really has very little room for leverage in pushing China for anything. Why would Jeff Immelt, or anyone else, expect China to do anything else except pursue its own interests in light of this situation? And why should he expect those interests to be the same as the west’s? It’s not as if the west has been a shining example of responsibility, success and accountability for the whole world.
Where Jeff Immelt veered off into politics was his use of the sensitive word “colonization”. For most westerners who do not follow the Glenn Beck school of racial harmony, equality and justice, colonization is associated with a largely shameful period in western history, which left a scar on its relations with Africa and India. Saying that Chinese intentions are the same as the west in the 19th century is an over-simplification, and it is too early to say how China and Chinese corporations will behave. For the most part, Chinese government policy and Chinese companies have had a laser-focus on mineral extraction and business, to the exclusion of everything else. They have shown no interest in getting Africans to adopt Chinese language, textbooks and beliefs, as did most of the European colonial powers in the 19th century. For this reason, Jeff Immelt’s choice of the word “colonization” was unfortunate. In most cases, projecting past injustices onto the future don’t help us to gain further insights; instead, they appeal to the worst sides of our character and create further misunderstanding.
Countries like India have shown that they are very good at defending their own business interests and squeezing business concessions from China; they do not need help from the west.
If only the American taxpayer had been so well-protected!
Chinese e-commerce companies have done especially well in the past year, and many are putting their finishing touches on to get ready to hit the NASDAQ and other markets.
Will bring you more information and in-depth coverage on these companies soon.
The greatest weakness of these companies is not their operations and marketing in China, but the HR firms they hire in China are generally stupid, and are unable to help them bring in the level of experienced management to talk authoritatively to analysts and institutional investors.
Google’s deadline for getting approval for its ICP license in China has passed, and aside from Google Suggest being blocked, there don’t seem to be major changes.
Aside from the cat-and-mouse being played out, the one thing which has irked my curiosity is that there doesn’t seem to be anyone on either side (Google or Chinese side) who wants to be openly identified with the issue. Aside from David Drummond, who blogs about China, there is no one on the Google side who has stepped up and said “This is our position and this is what we stand for”. Earlier on, it was Sergey Brin who claimed to speak for Google, taking a hard line against censorship. Would be nice if someone stopped him and asked him if he still speaks for Google on China, and what is his and/or Google’s position?
July 1 is a holiday in China, today marks the 89th anniversary of the founding of the Chinese Communist party. It is kind of curious, even ironic, how a party which was founded on supporting the workers and the proletariat against capitalism and exploitation is now sitting on the biggest pile of cash in the world. But, on reflection, it is no more strange than how a country which was founded on principles of equality, freedom and justice started out accepting slavery as an institution, and continues to struggle internally with the issue of race. Internal contradictions are normal.
Under the current Chinese administration, it seems that the government and party are trying to reconnect with their roots among the workers. This is seen through the quiet tolerance shown for Foxconn workers and for striking Honda workers. This was balanced off against not allowing these worker actions to spread.
On the surface, it seems that there is a shortage of blue-collar factory workers in China, and an excess of white-collar urban workers. Now, it is easier to get a job if you are a blue-collar worker looking for a job in a factory than for a recent university graduate looking for an office job. I expect this trend to pick up pace in coming years.
One of the biggest challenges for the party in coming years is how to rebalance the expectations of China’s new workers entering the workforce. For the vast majority of Chinese, it is logical to move from the farm to the factory, then to the city. But what happens when finding work in the city becomes very hard and highly competitive? Will China become a nation of well-paid factory workers and poorly paid white-collar workers? If that is the case, then what is the point of all that education?
These are all things the Chinese government needs to think about as Chinese society continues to change.
Today is the day Google China needs to get government approval on its ICP (Internet Content Provider) license. The news from yesterday shows that Google China is trying to finesse its Chinese operations, and find a middle ground on its commitment against censorship and complying with Chinese regulations.
My guess is that the Chinese government will think that Google is trying too hard to be sly and tricky, and will punish them accordingly. Killing the monkey to scare the chickens, as the old Chinese saying goes.
I have been spending more time writing for Forbes.com The China Tracker. They have put together an excellent group of writers to write about China, and I’m lucky to be among them. When you have time, they are definitely worth the time to read.
You can access my articles on Forbes.com The China Tracker from this page.
As location-aware applications become more core for mobile services, especially with the launch of the new iPhone 4, location and mapping services become ever more important.
The Chinese government has made clear that non-Chinese owned mapping companies will not be able to provide basic mapping services and AutoNavi is filing for an IPO. Will be interesting to see if AutoNavi tries to get its products/services into mobile phones.
In the meantime, Apple is getting more aggressive about protecting and using the data it collects on iOS 4, and this has caught the attention of US legislators.
In the short term, this will give Hong Kong an advantage for developing these applications, because it is relatively restriction-free, as I mentioned in this article for Forbes.com The China Tracker.
The issues are complicated, and will converge in a way most people are not yet aware of. Will write more about this subject later.
There are clouds on the horizon for foreign shareholders in Chinese Internet companies involved in offering domestic payment solutions according to this Financial Times story.
Earlier on, I wrote an article for Forbes.com The China Tracker about some issues with the search advertising field in China. If you want to do a deep dive into some of the Baidu issues, this article from china/divide’s Kai Pan is useful.
Following on the government’s white paper on the Internet, the government’s Ministry of Culture is coming out with a slew of regulations aimed at regulating the Internet, including requiring game players to use real-name registration, and limiting use and circulation of virtual currencies.
For my take on the role of games in Chinese society, see this article. As for the new rules affecting virtual currencies, it will be interesting to see how Tencent, which issues Q-Coins will deal with the issue.