College Papers

When operating abroad

When operating abroad, companies are required to comply with the laws of the nation in which they do business, however, there is often a conflict between country law and company ethics. Google established its operations in China in 2006 and brought its Western business culture to the People’s Republic of China (PRC). As a condition of doing business in China, Google agreed to comply with the Chinese government’s censorship policies and block search results on subjects that were considered politically sensitive. The company was criticised for this decision, as self-censorship goes against Google’s traditional corporate values. From the beginning, Google’s relationship with the Chinese government was delicate.

Many of Google’s Chinese employees found it hard to adjust to the Western work ethic: most notably, the company policy which states that employees must devote a fifth of their working hours to independent projects. In addition, unlike engineers in other locations, Chinese engineers were denied access to Google’s software source code, which limited what they could do. This demonstrates the company’s lack of understanding of Chinese business culture. To navigate the intricacies of China’s national bureaucracy, Google hired an experienced Chinese executive to manage government relations. However, she was later fired when it was discovered that she had given iPods as gifts to government officials, as this is against Google policy. Gift-giving is a common practice when doing business in China, but giving gifts to public officials can be construed as bribery in Western cultures.
Google was the target of a series of China-led cyber-attacks with hackers accessing the Gmail accounts of Chinese human rights activists, as well as a personal campaign against the company by a Chinese government official. Consequently, Google stopped adhering to the Chinese Government censorship rules. This was followed by the company’s withdrawal from mainland China in 2010, which came as a shock to Google’s Chinese personnel. Although Google’s search engine remains blocked in China, the company has been attempting to rebuild its presence in the world’s second-largest economy since 2012 because of the huge market potential. In December 2017, Google announced that it is opening an artificial intelligence (AI) laboratory in Beijing (New York Times, December 2017).

Cross-cultural competence is critical to business success and Google’s lack of understanding of the Chinese culture had a significant impact in its dealings with the Chinese government. When Google first arrived in China, it tried to organise its operations in the same structure as in the United States and bring its relaxed company culture to its headquarters in Beijing. However, there are major differences between Western and Chinese business culture and Google was unable to bridge the gap, which can be seen in the company’s clash with the Chinese government, and its decision to stop censoring search results. Coming from the USA, where freedom of speech is paramount, Google had a hard time adapting to the authoritarian ways of mainland China that limit free speech and the Great Firewall that censors anything that shows China or the Communist-led government in a bad light.

As mentioned previously, Google hired a Chinese executive to manage the company’s relationship with the Government, however, there were communication issues as she did not speak English. China is a high-context culture, whereas Western cultures, most notably the USA, are low-context cultures. In high-context cultures, communication is non-confrontational and more indirect. People may not explicitly say what they want to convey, as the context of what is being communicated is more important than the words. In low-context cultures, however, communication is more direct and confrontational. What is said is explicit and specific. Perhaps the communication barriers caused by the language differences exacerbated the tensions between the Chinese government and Google.
For a company to succeed, it is important to understand how business is done in China. The concepts of Guanxi and Mianzi are an integral part of Chinese business culture. Guanxi literally means relationships or connections. Mianzi is the idea of saving or preserving face, in other words, upholding one’s image or reputation. Moreover, traditional Chinese business culture is greatly influenced by Confucianism, which emphasises group identity and long-term personal relationships. To successfully do business in China, multinational corporations must cultivate and maintain good relationships with key business contacts and relevant government officials. In Western business culture, transactions come first and relationships are developed afterwards, whereas in Chinese business culture, relationships are developed first. The fact that the Chinese executive at Google gave free iPods to government officials is commonplace in China – it is part of Guanxi and epitomises China’s relative-truth culture.

The author states that a Chinese government official launched a campaign against Google because he found negative references to himself when he used the search engine. The desire to save face is of paramount importance in China, and direct criticism can lead to a loss of face, which is a humiliating experience. Therefore, it is not acceptable to publicly criticise people or institutions in the People’s Republic of China. This means that in the Western world, you may openly criticise others (value of free speech, even on the Internet) as opposed to China’s concept of preserving face. This comes from the fact that China is a relative-truth culture, compared to Google’s fixed-truth environment.