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Case Code: BENV033
Case Length: 13 Pages 
Period: 2010-2016      
Pub Date: 2017
Teaching Note: Available
Organization : Google
Industry : Internet/software/hardware
Countries : China
Themes: Market entry  
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

Google in China-The Reentry Dilemma

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Google entered China in 2000 and started operating a search engine in Chinese. It had 24 million web pages. There was not much competition and the search engine’s simplicity of operation and ability to carry out search effectively made Google highly popular in China. At that time, though the internet was at a nascent state in China, the government intermittently blocked several websites using IP filters. During times of heightened security like political events and the anniversary of the Tiananmen Square incident, the blockage was pertinent. In late August 2002, ahead of the 16th Communist Party Congress, when users were trying to search using the Google website, they were redirected to other local search engines like Tianwang Search Engine or other sites. Thus, the government showed that it wanted to have a hold over the internet in the country and over what the people were reading or seeing. In early September 2002, a new filtering system based on keywords was introduced by the Chinese government authorities. Software that filtered specific words like freedom, democracy, Tibet, etc., was installed in public access networks and this resulted in websites including Google being blocked. (Refer to Exhibit II for more about the internet market in China)..
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In spite of following the Chinese government regulations and censoring the search results at, the company continued to face problems. In June 2006, the site was blocked in several cities across the country. It was reported that the government was not satisfied with the way Google was censoring the search results. Even by 2008, Google’s share in the market remained at 30%, and it failed to gain share from Baidu, which faced controversies for the way it had filtered some searches . ...


By moving from China, Google left a huge market. In the next few years, China became a leading market for the internet, and mobile, and China went on to become the world’s largest smartphone market. The number of internet users in China was double the population of the US and their number was growing rapidly, with more and more people becoming a part of the digital revolution. The Chinese used their smartphones to a great extent to surf the internet. China had the world’s largest number of smartphone users....


With the rapid developments in the Chinese market and with it continuing to provide huge opportunities, Google’s interest in China started to grow again. To reestablish a presence, it started making a few investments in the country. In 2014, Google made investments in a China-based company, InnoLight Technology, which made high-speed data transmission hardware. In October 2015, Google invested in a Chinese startup called Mobvoi, a Chinese voice activated search engine. The company was founded by a former Google employee....


In spite of all Google’s plans, it was up to the Chinese government to decide on Google’s fate. The main problem due to which Google had left the country was censorship. After 2010, government had tightened its control on the internet and censorship had become even more restrictive. At the same time, Chinese government officials and cyber attackers in China had developed more skill and abilities over the years. Several cases were reported of Chinese hackers accessing the records of millions of US government workers. Similarly, several cases of personal information theft from healthcare companies, health insurance providers, etc. were reported. Kitty Fok, managing director of market intelligence firm IDC China, said, “The Chinese government has a different policy regarding censorship, and it is a matter of whether Google can comply or offer something different [in the Chinese market than elsewhere].” ..


Exhibit I:Google Quarterly Revenues
Exhibit II: Internet in China