The words of Laura Ries:
Why Google should get out of China
Sometimes the most illogical business decision is the right decision for the brand. This is certainly the case for Google.
Google is pulling its company out of China, the biggest internet market in the world.
Sounds illogical and crazy to me and most leaders. But it is the right call for several reasons.
1. Google wasn’t winning in China anyway.
Google is the most popular search engine in the world and dominates the market in most countries, except China.
Why is that? It’s simple, Google was late.
Google only entered the Chinese market in 2006. Even a brand as powerful as Google is at a huge disadvantage if it isn’t first. Baidu was the first search engine in China and it is seen as the real thing in search with over 77% marketshare. By contrast Google has only around a 12% share.
Of course, even a small share in a county like China adds up to a lot of users. China has the world’s largest online population with over 300 million people using the Internet, a figure that is expected to soon exceed the entire U.S. population.
Google has had success with one part of the Chinese market; younger and more educated Chinese users tend to prefer Google. But Google has not succeeded in getting the general Chinese population on board.
Google also is losing in Russia to a brand called “Yandex,” in South Korea to a brand called “Naver.” And in Japan to Yahoo. In all three countries, Google wasn’t first.
2. Google has a flag to carry. And is getting a lot of PR.
Google equals “search” in the minds of consumers across the world. But what does “search” really mean? The dictionary definition of search is “the activity of looking thoroughly in order to find something.” You ask Google to search for something and it does. Google searches for it, finds it and delivers it to you.
It does that everywhere except in China of course. In China the government censors information. In China most internet users can’t even access this blog. It is crazy, scary yet true.
In most of the world, the value of freedom of information is highly regarded. Probably in no place more so than the United States of America. Freedom, democracy and free markets are our core values.
China has realized the power of free markets and since opening up its economy has seen great rewards. But information is not free at all in China.
As a company focused on search, it is in Google’s best interest to fight for freedom of information around the world. The media has certainly rewarded Google’s fight with China with a massive amount of media coverage. There have been multiple front-page stories in the Wall Street Journal, New York Times and many other publications around the world.
3. Freedom will eventually win.
Google is picking the “freedom” side in this fight. In the short term, Google is going to suffer a loss of sales. But in the long term, Google is strengthening its focus on search and freedom. Around the world most people respect the idea that the Internet should be a place of freedom of information. Access to information should not be filtered by any government or any group.
Because of its stand in China, Google benefits now in other markets. And if history repeats itself, freedom of information will eventually come to China. When that happens Google will be ready to claim itself the real search engine.
4. Age doesn’t always equal wisdom.
According to the Wall Street Journal, Google’s decision to leave the Chinese market involved a heated debate with CEO Eric Schmidt in favor of staying and the two young co-founders of the company, Larry Page and Sergey Brin, in favor of saying “zai jian,” Chinese for goodbye.
Don’t tell my father, but sometimes kids are right. Schmidt was probably looking at the numbers while Larry and Sergey were looking at the message. Pulling out means losing millions but it also says what Google is willing to fight for.
Sometimes the best decision for a company to make is based on gut instincts rather than spreadsheets.
Sure, Google will lose a few dollars in the short term, estimates say up to $600 million in lost sales.
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