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Fri, Jan 15, 2010 - Page 10 News List

Companies watch and wait as Google mulls leaving China


Google Inc’s potential departure from China may not prompt others to follow suit, but its declaration could help shine a light on the business environment in the world’s third-largest economy.

Google said on Tuesday that it might stop operations in China, a move that could ramp up pressure on others to take a stand.

“This is going to be raised to another level, the US government is going to get involved,” said UBS analyst Brian Pitz.

Still, a day later no other company had joined Google.

Google is uniquely positioned to go it alone, given its global stature and small business footprint in the country. China is a tiny market for Google, at an estimated US$200 million to US$600 million in annual revenue versus US$22 billion worldwide.

Still, China’s economy is likely to grow 9.5 percent this year and it has the world’s largest telecom and Internet markets by users.

The Chinese market is difficult to navigate for many US companies. But opportunities are so vast that companies ignore it at their peril, analysts say.

Google said at least 20 major corporations were hit by cyberattacks that originated in China. The company suggested the strikes were more than mere isolated hacker attacks.

The firm said the attacks, along with moves by China to limit free speech, prompted its decision.

William Miller, an emeritus professor of management and computer science at Stanford University with experience in China, said Google shone a light on concerns held by a number of firms.

“I don’t think it will be just a Google story and it’s not just about media companies. There are a lot of other companies who feel that there are some sorts of attempts at espionage,” he said.

Some firms that have withdrawn from or sold down PRC investments


- Offloaded cinemas it ran in China to local partners.


- Folded China operations into joint venture with Tom Online in which Tom got controlling share.


- Sold Shanghai brewing business and Chinese beer brands to Suntory on back of fierce competition in the China market.


- Was forced to close several outlets in China after founder Jimmy Lai called then-premier Li Peng a “turtle egg.”


- Pulled out of China in 1993 over human rights concerns. Later returned.

Source: Reuters

Gartner analyst Whit Andrews said Google’s move puts pressure on companies like Microsoft Corp SAP and Oracle, but those companies have much more at stake in China than Google.

“The impact on revenue and company valuation is substantially greater for every other major technology company than it is for Google,” Andrews said.

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