Posted by: Bruce Einhorn on January 26, 2010
In case you missed it, check out the column by my colleague William Pesek Jr. on the spat between Google and China. He argues a big beneficiary could be India. Pesek writes, “China should be concerned about the most influential Internet tool bypassing its $4.3 trillion economy and 1.3 billion people — and the specter of other Silicon Valley giants following suit. Executives at multinational companies who dragged their feet on diversifying investments away from China may now expedite the process.” As for India, the country “has a track record of innovation and a stable of internationally competitive companies that China doesn’t. India also has far superior laws on intellectual property and corporate governance. And China’s willingness to blow off Google plays to India’s relative advantage in these areas.” India’s billionaires, he adds, “must be rubbing their hands together in glee as China’s leaders make an expensive miscalculation.” Read the whole thing here.
I’m not sure China would suffer badly from a Google exit, though. Pesek rightly points out that a world driven by knowledge flows, it is “vital to stay attuned to the latest developments in any field. Only then can innovators ride the latest waves in international business and finance and create the hundreds of millions of jobs needed to raise living standards.” Without Google.cn, will Chinese innovators be able to do that? I think so. Even if Google were to pull the plug on its Chinese-language site – which isn’t nearly as popular as Baidu’s anyway – the real Google site, the English-language one that so many of us depend on every day, would still be there. China’s unlikely to cut that off; censors would just continue to zap search results for taboo subjects like the Falun Gong and the Dalai Lama.
Pesek writes that China, unlike India, lacks “a growing roster of homegrown knowledge-based and technology outfits creating jobs, pushing the country up the value chain and inspiring young people to become the next Bill Gates.” He’s got a point. Despite years of effort, no Chinese company comes close to Indian software services powerhouses Infosys, TCS and Wipro. China does pretty well in other sectors, with companies like ZTE and Huawei globally competitive in handsets and telecom equipment, Shanda and Netease in online gaming and Alibaba in e-commerce. Lots of would-be entrepreneurs in China look for inspiration to Jack Ma, the former English teacher who founded Alibaba and in just over ten years has built it into a company with a market cap of $11.5 billion.