17143002 Google Problem in China

7/31/2019 17143002 Google Problem in China

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INTRODUCTION

GOOGLES PROBLEMS IN CHINA


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Dhananjay kumar

Jaipuria institute of

management, noida


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BACKGROUND NOTE

Larry Page(Page ) and Sergey Brin (Brin) were the founder of GOOGLE.

It was started to came in existence when these two boy were student at StanfordUniversity ,California ,USA.

Together they started working on backlinks and called the project BackRub.

They created a ranking system which ranked the links depending on there importance.

They discovered an algorithm called PageRank.


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Larry Page & Sergey Brin- the Founders of Google


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CONTINUE

BackRub used PageRank to sort the results and placed the most relevant resultsat the top.

The duo named the search engine Google(after googol or 10 to the power 100).Released its first version on the website of Stanford University in August 1996.

Encouraged by the co-founder of YAHOO! , David Filo they decided to opentheir own company .

One of the co-founder of Sun Microsystem ,Mr. Andy Bechtolsheim who wasvery much impressed by the potential of venture handed over a check forUS$100,000 in favor of Google Inc .


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Google opened its first office in Menlo Park , California in September 1998.

By December, 1998,Google was named One of the top 100 websites and search enginesfor 1998 by PC Magazine .

By February 1999, Google had a staff of eight and was answering more than 5,00,000queries a day.

By 2000, Google had 60 employees and by June 2000, the company had an index of OneBillion pages ,becoming the largest search engine in the world.

Google started generating profit from the beginning of the fourth quarter of 2001.

Google has an agreement with AOL in mid 2002 according to which ,Google provided AOL

with search results and AOL placed banner advertisement from Google on its websites.

BY Feburary 2004 ,Google had around 6 billion items including web pages and images .

On August 2004, Google came out with its First Initial Public Offer(IPO) and raised US$1.2Billion.


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January 25 , 2006 , the US based Google Inc . (Google ), the worlds

largest search engine censored the content that it made available inChina.

Earlier Govt. Agencies in China used to censor the content on Googles Site

that violated the regulations.

Googles view was that after censoring the companys website would

become easily accessible in China.

The company announced , In order to operate from China ,we have removed

some content from the search results available on Google.cn, in response tolocal law , regulation or policy.

There was displeasure among the human rights activists who advocates thefreedom of the press all over the world .


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Source: Bear Sterns
http://www.wikinvest.com/image/Chinaonlinemarketingbaidu.jpg


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GOOGLE IN CHINA

In September 2000, Google began operating a search engine in Chinese by offering 24 million

web pages in Chinese languages .

By 2002, Google had gained popularity in China owing to its simplicity and ability to carry outsearches effectively.

At that time Chinese Government was blocking several websites through IP filters intermittently .

Blocking increased during times of heightened security like the anniversaries of Tiananmen Squareevents, the national party congress ,etc.

Early September 2002, a new filtering system based on keywords was introduced by the Chinesegovernment .

Filtering Software was installed at four public access networks that blocked access to websites includingGoogle.

By 2003, Google was ranked #1 in Chinas search engine market with a share of 34.8%.


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CONTINUE

Google announced that users would be informed whenever accesswas restricted.

According to China Internet Network Information Center in August2005- Google was losing market share to its competitor Baidu.com.

Googles content had to pass through Chinese firewalls which stalled

the server and slow it down .

Slowdown was associated with filtering and censorship carried by

the chinese government and Internet Service Provider (ISPs).


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GOOGLE LOSES MARKET SHARE

By early 2004, users in China started believing that Google was unreliable andstarted using alternative search engines.

According to Googles Communication and Public Affairs , Vive President ,Elliot Schrage

Google was seven times slower than its rival Baidu. Google was not at all happy with the

way its services operated in the country.

When Google was market leader in market in 2003,Bidus market share in market was just

2.5% of the internet search market.

By 2005, Google share was below 30% while Baidus share market share was at 46% and latter's

share was growing at the rate of 10% at various prominent cities in China.


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Baidu a domestic search engine of China emerged as the biggest rival of

Google by the beginning of 2004.

Fig: Internet Market in China


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Reasons for Google losing its Market

Share to Baidu:

Speed

Baidu was Faster than Google.

Google was found to be 7 times slower than Baidu.

Services

Offered

Baidu offered downloadable online music service.

Google was searched for business opportunities & enterprise products.

Users

Baidu had the biggest group of Internet users in China in its favor- theStudents. (Mass popularity)

Google was mostly used by high-end, well educated people. (Limiteduser-base in comparison to Baidu)


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Source: Company Data
http://www.wikinvest.com/image/BaiduRev.jpghttp://www.wikinvest.com/image/BaiduRev.jpg


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Source: Company Data
http://www.wikinvest.com/image/BaiduRevenueMix.jpg


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FORBIDDEN SEARCHES IN CHINA

Tiananmen Square It is a public place in Beijing, China and is the largest open urban area in the

world.

Between April and June1989 the square witnessed student led demonstration

demanding freedom for press , which was soon joined by intellectuals and urban

workers.

Protester defies government call to disperse. On June 4,1989,army tanks and infantry were sent to Tiananmen Square to crush

the protests.

This resulted in death of around 2500 civilian , while some source claimed it was

around 5000.


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FORBIDDEN SEARCH CONT

Falun Gong Founded by Li Hongzhi , Falun Gong is a system of qigong(aspect of chinese

medicine involving the coordination of different breathing patterns with various

physical postures and motions of body).

It advocates practice of five sets of meditation exercises , introduced in China in

1992. By late 1990s it gain popularity all over the world.

In 1999, the government of China started suppressing Falun Gong referring the

practice as evil.

Tibet Independence/Dalai Lama Tibet which is under control of china is considered as an illegitimate military

occupation by Tibetans loyal to the Dalai Lama

Dalai Lama flee from Tibet in 1959 , and settled in India.

As of 2005, Tibet is seeking an autonomous status similar to Hong Kong


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THE LAUNCH OF GOOGLE.CN

Due to huge customer base ,to operate in China ,Google needed an Internet Content Providerlicense ,which required it to filter its content.

In April 2005 , Google obtain permission from Ministry of Information Industry in China ,to operatein China.

Google opened a representative office in Shanghai(Mainland China), and registered the URL-www.google.com.cn. Google also started its China R&D Center by the third quarter of 2005.

Google maintained its stand on protecting user privacy by storeing the search records fromgoogle.cn , outside the country.


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CONTINUE.

Google was filtering its results which was against its policy, in order to reach Chinese users effectively,and the company decided to agree to Chinese Governments terms and condition, which includedChinas local content restrictions.

In January 2006 , google.cn was officially launched .

Google placed disclosure on all pages from where the search results war filtered out.

Due to earlier office in Hong Kong ,it was limiting Googles ability to provide advertising services tocompanies. So, in October 2005 Google launched its sales and business development activities inChina.


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POLITICAL FACTOR

Government(Still work

on the ethics of

communist).

Protecting the Domestic

Firms(Some way ofshowing PROTECTIONIST

GOVT.)


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CULTURAL FACTORS

Chinese give more values

to Chinese products .

Restricted Culture .

Openness doesnt fit inChinese Culture .


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DEMOGRAPHIC FACTOR

Age Group 15-64 - Population 71.9%

Urban population - 42.3%

Rural Population - 57.7%

Urbanization Rate - 60% - 65%


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TECHNOLOGICAL FACTOR

FIREWALL

ICP(INTERNET CONTENT

PROVIDER):

Sensitive Content restriction

in China


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SOCIAL FACTOR

Tiananmen Square

Independence Of Tibet(Considered as an illegitimate military occupation by

Tibetans loyal to Dalai Lama.

Tibet is seeking an autonomous status similar to Hong Kong.

Falun Gong

Suppression Of Human Rights(Like freedom of speech , freedom

of association .

Provoking way of Human Right Watch(A US based NGO ).


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QUES1: Google has

announced that it will becensoring its search

content for its Chinesewebsite .Is Google taking

the right step? How couldGoogle benefit from thismove? Do you think it will

adversely affect the

company in other markets

in which it operates ? Take

a stand and justify youranswer.

QUES:2 Google has

been losing market shareto Baidu in recent years .

What strategies should

the company do to regainmarket share in the

Chinese Internet searchengine industry. Discuss.


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Advantages

Easily accessible & fast service

Local presence

Opportunity of Business advertising

Support of Chinese Government

Opportunity of growth , making the credibility of chinese people

Strong position than Baidu


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Effect on the other market

1. Users loyality of the Google in other Countries

Google s mission statement- Our mission is to organize

the world s information and make it universally accessible

and useful .

2. Against of human right-activites and advocates offeedom of the press all over the World


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Question.2. GOOGLE has been losing market share to BAIDU in recent year. Whatstrategies should the company adopt to regain market share in the Chinese internet

search engine industry? Discuss.

80 percent Chinese

youth in Shanghaibetween ages of 18and 24 used Baidu

as their primarysearch engine than

Google.

Reasons behind losing share :

1. Bizarre hiring practices.

2. Slow and difficult to connect.

3. Service and productoffering.

Ans: LOSING MARKET SHARE-


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PRODUCT AND SERVICES FOR USERS

Source: Credit Suisse


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CUSTOMER SATISFACTION

Sources:www.metrics2.com


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Strategies to regain marketshare

Google has failed for much more prsaic reasons. If Google can change some of itsoutdated practices then it will do very well in China.

Some are as follow :

Improving and enhancing product & services

1..online music services ,like. Mp3 and other media files

2. Faster and easily connectivity

Right management team in place , delegate authority to them and localize services.

Follow the Government rule


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Answer

Google is actually choosing to censor itself in

accordance with a constantly updated list of

unacceptable term to Chinese Government

The Company agreed to the censorship because

even if it had provided uncensored contents thecontent was filtered at the ISP level and users could

only access that content which was approved by the

Government


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Economic Benefits to China:

Revenues from Googles operations will contribute to Chinas GDP &GNP.

Googles entry & simultaneous expansion in China will contribute to

better International Relations & Foreign Trade (bringing in moreFOREX reserves).

Openness & Competitiveness of China in International Markets will beenabled through entry of more foreign firms (like Google & Yahoo).

China will display a favorable Business Environment for entry of moreInternational firms (provided, the Law of the Land is not very rigid &

can be moulded in the firms favor.)


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Bibliography:

www.google.cn

www.baidu.com

Wikipedia

Credit Suisse

www.metrics2.com
http://www.google.cn/http://www.baidu.com/http://www.baidu.com/http://www.google.cn/


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17143002 Google Problem in China

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