Posted by: Bruce Einhorn on May 11, 2006
Yesterday Baidu, China’s leading search company, announced first quarter numbers that were so good the company’s Nasdaq-traded stock price jumped by 37% in just one day. Baidu also announced that the company has launched a Chinese-language encyclopedia called Baike.
(Helpful hint to all non-Mandarin speakers out there: Baike is pronounced “bi” and “kuh,” two syllables.) The new online reference source will be in Chinese, will be written by Baidu’s users, and will comply with Chinese censorship rules. In other words, it will be a sanitized alternative to Wikipedia, which is banned in China.
The news is a useful reminder of how China is striving to be self-sufficient on the Net. In the debate about the role American companies play in censoring the Internet in China, the argument is often about leverage. Aren’t U.S. companies – world beaters like Google – powerful enough to get Beijing to make concessions on the issue of censorship? Companies say no but many critics disagree. For instance, in February, around the same time the issue was gathering steam in the U.S. thanks to a hearing on Capital Hill in which lawmakers reprimanded Yahoo and others for following Beijing’s rules, Jacob Weisberg addressed the question of leverage in Slate: “[O]ur technology companies, which are the envy of the world, have unique leverage. If U.S. law requires them to take a joint stand on the issue of Internet freedom, China would face a choice between throwing out the lot of them or easing up on anti-democratic enforcement. China does not want to forgo the economic advantages of their presence, even at the risk of undermining its political order.”
Surely there are some American companies that China’s rulers truly want to have in the country. The Chinese very much want investment from the likes of Intel, since China’s semiconductor industry is still in its infancy. The government has a love/hate relationship with Microsoft, which it wants to help build the software industry even as Beijing encourages the development of open-source alternatives to Windows. But do China’s leaders really care one way or the other whether a Yahoo or eBay or Amazon is in China, when the country has no shortage of home-grown alternatives like Sohu and Taobao and Dangdang? Yes, Cisco is big, but China has Huawei, run by a former officer in the People’s Liberation Army. Google is all-powerful, but the Chinese have Baidu, which is good enough. Best of all from a Party perspective, these Chinese companies follow the rules that Beijing lays down - without any public griping. If the Americans were to follow the advice of some critics and demand that Beijing change its policies or else, I doubt that China’s leaders would need to spend much time before telling them where to go.