Opinion

Sparring partners must bury hatchet, break bread

By Duncan Clark (China Daily)
Updated: 2010-01-15 08:08

Google's announcement this week that it plans to withdraw from China is a sad turn of events for both the company and the country. Both have benefited and contributed to each other's development. Hopefully a painful divorce can yet be averted.

Can China do without Google?

At first glance, of course the answer is yes. The jump in the share price of Google's competitor Baidu speaks to that.

Investors are enthusiastic about the prospect of less competition and more advertising dollars for the company.

Several hundred people may lose their jobs, but many are already reportedly in discussion with headhunters and are likely promptly to find new employment if needed. But looking deeper into the situation, the costs of the potential divorce become apparent.

As an iconic company not just in the United States but around the world, Google has many friends and fans. Internet users around the world have developed strong emotions to some of Google's innovative products, from Gmail to Google Earth to YouTube to Picasa, to name just a few.

Much like a couple with children, divorce affects more than just the couple. Potential victims in this case include China's drive to become a more innovative country, and also its efforts to encourage companies to 'go forth' and expand overseas.

The 'innovation child' will be negatively affected if Google's claims are substantiated and find a receptive audience overseas.

Already concerns have been mounting within multinational companies about a possible subversion of China's 'indigenous innovation' drive into a 'Buy China' policy (even if of course China is not unique in experiencing protectionist pressures during the recent financial crisis).

Experience shows that a lessening of competition will inevitably lead to a diminution of innovation. A fatter and more complacent Baidu surely wouldn't serve China or its own interests best.

The 'go forth' child might also suffer if China's brand overseas is tainted as being an unreliable trading partner where intellectual property is threatened by cyber-attacks, and multinational companies are themselves denied the market access many had hoped for with China's World Trade Organization accession almost a decade ago.

It is hoped that counseling can keep Google and China from going their separate ways.

Google's announcement this week was entitled 'A New Approach to China'. Will China be able to contemplate 'A New Approach to Google'?

The world has enough challenges already for such a high profile couple to be squabbling. By working closer together, as the two have already demonstrated, they have more to contribute. For the sake of those who trade with both, a reconciliation is much to be desired.

The author is chairman of BDA (China) Ltd. The opinions expressed are his own.