The Chinese regime’s heavy internet crackdown has not only blocked hundreds of millions of Chinese netizens from accessing information on the web freely, it has also undermined the confidence of foreign investors in China’s internet market.
Google’s revenue in China has been down, as has the number of its users. Yahoo has recently sold all of its shares in Alibaba.com (a Chinese version of eBay), leading to widespread speculation that Yahoo is backing out of China’s market.
Experts worry that in the long run Chinese netizens and foreign investors will lose confidence, and investments of Chinese internet companies in foreign countries will also be affected.
Google entangled by censorship issues
According to a previous report by Radio Free Asia (RFA), when the Chinese regime launched a highly publicized anti-pornography campaign in June to introduce its internet-filtering software Green Dam-Youth Escort, Google.cn (Google China) was harshly criticized by the regime for providing easy access to pornography and indecent information. Google.cn took a low-key approach, filtering more sensitive words and housekeeping its key-words list. Some have criticized Google.cn for caving in and damaging itself.
The latest statistics show that Google.cn has continued to lose market share in China. According to last Monday’s report by the China Internet Network Information Center (CNNIC), among first-choice search engines in China, Google.cn suffered a significant 3.9 percent drop to 12.7 percent from last year’s 16.6 percent of market share, while China’s own Baidu grew by 0.3 percent to 77.2 percent. Some critics commented that this had a lot to do with Google’s compliance with the regime’s heavy internet censorship policy.
Du Dongjing, an IT worker who sued Shanghai Telecom for infringing on customers’ rights in 2007, told RFA on Sept. 24, “When any [company] demands freedom of speech, the authorities simply cannot control it. That’s why I think the regime still considers Google.cn a big hidden threat, although Google.cn has already made quite a few compromises. All in all it has taken some [positive] steps and has offered a platform and channel for those who wish to have their voices heard.”
He added, “Goggle claimed that the company 'will do no evil.' Let’s not comment on whether Google has done anything bad. The claim alone is intolerable to the Chinese regime. If every business in China, including newspaper companies and radio stations, all stopped doing anything bad and just tried to be a little bit honest—this alone would be something the regime could not tolerate. Consider that overall in China, everyone is living in a world of lies everyday.”
Although Google stressed that it will "DO NO EVIL," it has nonetheless cooperated with the regime for the sake of its market share in China. For example, Google’s search engine in China won’t let you find “Xu Zhiyong,” the name of a famous Chinese legal activist. Google’s Youtube.com and Blogger.com have also been blocked, making Google.cn less competitive compared to China’s own Baidu.
Hong Bo, an IT critic, commented, “It doesn’t matter what Google does, the regime simply will never treat Google as one of its own—it will always treat Google like an outsider. Baidu is considered ‘one of the family’ that can be trusted to do what the regime wants. It doesn’t matter how well Google behaves, the regime will always think it’s too hard to control Google because it is, after all, a foreign company.”
Foreign investors backing out
These recent developments have prompted foreign investors to adjust their outlook on China’s market. In 2005, Yahoo invested US$1 billion in the Alibaba Group, and handed over exclusive rights for the "Yahoo China" brand to the Alibaba Group. However, Yahoo announced on Sept. 14 that it had sold all of its shares in Alibaba.com, a subsidiary of the Alibaba Group.
Charles Mok, Vice Chairman of the Professional Commons in Hong Kong, commented that the regime obviously did not care about foreign investors’ backing out of China’s internet market. The regime is considering developing its own domestic enterprises, offering similar software and services. In this scenario, they wouldn’t need foreign investors and could control the industry more effectively.
Mok commented, “In terms of offering internet service, usually [Chinese companies] only come up with a Chinese version whenever there’s a new product released by foreign companies. They do what the government asks them to do, so they will be rewarded with market share. But, this is not good for Chinese companies. They won’t be motivated to catch up with the overseas market. In the long run, this does not appear good for the development of China’s internet.”
Read the original Chinese Article.
