"We’re pulling out of China" – Google

In a press release yesterday Google announced that it was pulling out of China. The reasons stated were the ongoing battle with Chinese hackers and the constant meddling of the government in censoring search results. I applaud Google for its actions.

Because China has long been the “final frontier” in terms of market growth it has been allowed to dictate terms to businesses operating there for two decades. And because most companies place profits above ethical concerns this situation has reigned supreme. So it was about time that a company said no to this unwritten contract.

I have barely talked about it on the blog, but I am no fan of China as a country or as an investment.

As a country China has a failing social contract with its people: we will oppress you and give you no options for governmental rule; in exchange we guarantee you a job. Having carte blanche to randomly arrest and execute its people, seize property, shut down the press and engage in other totalitarian behaviors is ugly. The Chinese people endure this crap because they feel that they will have jobs and money and food – at least in this post-Cultural Revolution China they believe that. In exchange, the communist Chinese have license to kill and ill. This situation has been underwritten by capitalist governments around the world whose most powerful constituents, businesses, have drooled all over the opportunity to “open up the Chinese markets.” So Google’s action warrants attention; and in my mind, praise. In short, Google’s choice is in accord with one of my favorite maxims (courtesy of Stephen Covey’s “7 Habits of Highly Effective People.”). That maxim: think win:win, or no deal. Effectively Google has said we can’t make our business model work in China so “no deal.” Amen! So this is why I am not a fan of China as a country.

I am no fan of China as an investment because it doesn’t run its economy for profits; it runs its country for social stability – hence the promise of jobs to all Chinese. But the Chinese government is not stupid, it knows that foreign investors expect companies run for efficiency, economic gain and profits. So despite the fact that the Chinese do not run their businesses, or their country, for efficiency or openness, we get reports all of the time about their economic advances. To be clear, I have no doubt that the Chinese economy is growing. However, even when using the “officially reported” Chinese economic statistics, the economy there looks expensive. But it is my opinion that the Chinese make up their economic statistics. The degree of the corruption is not really able to be estimated. However, here are the elements being balanced against one another: keeping in power the totalitarian government that, in one form or another, has been in place for 2,000 years versus an open, honest society.

All hail Google!

Jason