GWU Issues Management

A blog established for the George Washington University School of Political Management's Issues Management course.

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Location: Washington, D.C., United States

A middle aged white guy, who likes to think, talk and, too infrequently, write about politics, religion and gadgets.

Sunday, February 19, 2006

China, the Internet and Business

There were a few fascinating stories in both the Washington Post and New York Times today that address the challenges that the Internet is imposing both on the Chinese government and the American companies that want to do business in that country. Read this story (below) and also a column from the NYT that I will have to send you by email because it's behind the firewall.

The Click That Broke a Government's Grip: "With newspapers, magazines and television stations coming under tighter control, journalists and their audiences have sought refuge online. The party's censors have followed, but cyberspace in China remains contested terrain, where the rules are uncertain and an eloquent argument can wield surprising power."

Here's a clip from the Times column by Nicholas Kristoff:

"So think of the Internet as a Trojan horse that will change China. Yahoo has acted disgracefully, but the bigger picture is that the Internet is taking pluralism to China — and profound change may come sooner rather than later, for unrest is stirring across the country."

And here's the link, in case you have access.

You'll learn that four technology companies testified before Congress last week. They have dealt in different ways with the challenge of doing business in China and none of them comes away completely clean. I'm reminded of Google's corporate mission statement, "Don't be evil." Even though Kristoff declares Google the best of a bad bunch, they don't seem to live up to their own high standards.

So, let me hear your thoughts about how these companies are managing this issue. See if you can determine whether their strategies are the same or different. I think we'll all probably agree that their behavior is bad, but what I would really like you to focus on is what they are doing to protect their corporate reputations. Describe their respective strategies, messages, which audiences they care about. What are their goals and objectives. You don't have to answer all these questions, just pick out pieces. Look at what one company is doing. Or just focus on one element, i.e. messaging, and talk about how each is handling that.

This is clearly an issue that's going to be around for a while. In fact, I'm thinking maybe this might be the issue on which we will do our final plans and presentations.


Blogger Johnny Utah said...

Yahoo has offered a meager, lifeless defense of its despicable behavior. According to a CNN/Fortune article, “The U.S. company ‘does not have day-to-day operational control’ over Yahoo!China, which includes a search engine and e-mail services, according to Michael Callahan, Yahoo's general counsel.

Translation: it’s not us, it’s them.

Same lawyer “admitted that Yahoo had not reached out to the family of Shi Tao after he was imprisoned.” Big PR no-no.

Yahoo seems to feel it is big enough to weather the storm and hide behind the defense that it is a separate entity from its Chinese sibling. No one is going to buy that line.

A statement from Yahoo also tried to pass the buck along to the U.S. government, saying “We believe continued government-to-government dialogue is vital to achieve progress on these complex political issues.”

Yahoo is simply trying to pass the buck and duck responsibility.

9:47 AM  
Blogger skeeba said...

Google, Yahoo! and Microsoft are competitors. China is the playing field. The billions of clicks by an exponentially increasing Chinese citizenry is the commodity. Each of their goals is to become a what they are in the U.S.--recognizable brand names--they can achieve this through grabbing more internet viewers. They are aware of the power of the tide of the Internet is too great even for China. Eventually it will break. The dynamics of a global economy will compell China to relent. In the meantime, yes, Google, Yahoo! and Microsoft wait out some public criticism, focus on branding in China, and eventually their customers will protest enough where they will be compelled to force action on China's part. You can't volunteer anything over there. Things don't work like that. The Chinese business culture will wait to the point when the perverbial "gun is at their head" -- hands are on their cash -- b/4 they do anything. There is no incentive for Yahoo!, Google, or Microsoft to initiate a rights war with China at this point, their consumer base might not be strong enough. So much more to say, but will hold off for now.

11:53 AM  
Blogger skeeba said...

Side note: Google named a new head of philanthropy, Dr. Larry Brilliant (seriously, that's his last name and he used to be a physician to the Grateful Dead). Related to China in the whole "Don't be evil". Google expect Dr. Brilliant to help shape public policy. It's worth noting this development as Google has morphed from a year ago as the Hot-stock to now one of the, if not THE, biggest company under the microscope right now. With the goverment wanting their search records and their role with China filtering laws, promises to be a major tool in their strategy to preserve their 'good' name and 'warm' feeling.

2:06 PM  
Blogger Dollar Phil said...

I'm still having trouble with the NYT article, but the first one, I think, is remarkable. Freedom of expression has long been an issues management challenge for the Chinese government. There is an upper limit to the controls governments can put on information flow, and that limit is sharply decreasing. The Internet may do what all the international pressure, economic sanctions, and military buildup in the world couldn't do: stimulate genuine civil discourse in China.

The Chinese government needs to create some kind of strategic plan to begin adjusting to a new information climate. Intellectual isolationism and ideological repression are no longer practical policies.

7:51 AM  
Blogger ajyass said...

The issue management dilemma here is how to do business in China without turing away Americans. Obviously Yahoo is not being effective at managing this issue if there are people boycotting there programs over what happened. This also becomes a problem for the other companies though. Few people (in the general public)take the time to gain in-depth knowledge on issues, so in this case it causes people to think that all American search engines are bowing to pressure from the Chinese government. I know that is the impression I was under originally. When the story about Google's censoring came out I was taken aback, but looking at Kristoff's column it seems that Google is best of the bunch.
These companies need to show the public the differences between what they are doing in China. Kristoff's advice on things to do also seem s like a good idea, the companies should take some of the suggestions.

7:53 AM  
Blogger nkatona said...

Censorship is a no-no by American standards, however, not a global standard. Could Yahoo, Google, and Microsoft do a better job in PR, sure, but the thousands of people in America that are protesting are being recouped by the millions of new clients in China.

Is this an issues that needs to be dealt with? I am not sure. The majority of Americans aren't globally focused until it directly impacts them. Can Yahoo and Google hide under the covers until this new cycle is over...I think so. Why would they allow censorship to happen, well it comes down to the issue of fighting a governmental entity. They can't stop tapping of international emails here at home so who says they can change the secrecy of China.

Morally yes Yahoo and Google should be on the front lines fighting for greater accesibility for all of China's citizens, however, on a business note I think their current strategy is cost effective and probably the best solution. Deny, Deny, Deny, and use misdirection.

8:35 AM  
Blogger Wal-Mart Walter III said...

I agree with many of the observations made by my fellow classmates. These companies are paying the price for not just doing business with China but for lowering standards to do so. The reality is that with the amount of industries / companies doing business with China this is not the first time this issue could have been raised. Many other industries / companies have probably made just as bad if not worse arrangements with China. Clearly, the problems here are this is a story that plays out great in the American press and these companies were caught by surprise or have simply mismanaged the situation. As much as I think about this, I do not see away to put a positive spin on this. However, do these companies really need to actively spin this? Will there be long term effects of these decisions? I don’t know the answers to these questions but I do know China is up for grabs right now. Capitalism is first come first serve. And although there will be “limits” to the Chinese version of the Internet a little peak at freedom can go a long way (i.e. Glasnost and Perestroika).

Anyway, its not like we are selling our ports to the Chinese.

10:06 AM  
Blogger ABPITT said...

I am having trouble accessing the NYT article as well.

I thought that the Washington Post article was extremely interesting. It proves that there are many people in China that dislike the censorship that the Chinese Government puts on journalism and the Internet. However, companies like Yahoo! China continue to comply with these restrictions. In turn this recent public expression of discontentment leads me to believe that from an issues management standpoint, this issue is around to stay.

10:11 AM  
Blogger RonBurgundy said...

I also could not access the New York Times article. The Post had a good article on the Google side of this struggle, in addition to the blog assigned article.

I can not help wondering what rights the Chinese people have under, any sort of, freedom of speech. That, for me, is the main issue. I realize it isn't the issue we are probably supposed to be examining, but I am really disturbed by the limitations enforced by the Chinese government. If they are regulating Internet use and its content, who might be next? Unfortunately these companies are forced to comply with such restrictions in order to operate in that country, but I agree with all the criticism they are facing from American lawmakers. Is it not part of the Internet's role and responsibility to communicate/disseminate information (no matter what it may be)?

I agree Yahoo and Google are doing what is necessary to compete in a capitalist market (as previously noted "first come first serve). They are operating under Chinese law by using licenses from local partners. I just wonder how long they can continue this and what will happen when they no longer can?

10:49 AM  
Blogger chitown_grrrl said...

I haven't been able to read the NYT piece, but the Post article was very interesting. I think that I could argue with the idea that censorship is a big no-no in America (I think it definitely depends on the context) but it's certainly true that we aren't crazy about China's brand of censorship.
I think the point that's really fascinating is that the internet has almost become a tool of democracy. All of that information out there, just waiting. And I think that as hard as China may try, they can't stop it. I agree with others that they may be able to delay it, but eventually they will have to cave on this.
Ultimately, I also agree that this really doesn't hurt google that badly. They made a good business decision, and as a business that should be their first priority. And I don't agree with their decision, but that hasn't made me stop using google.

10:54 AM  
Blogger Princeton Dem said...

The most interesting part of this, to me, is wrapped up in that Kristof quote about Yahoo and Google as the "Trojan Horses" that could undermine Chinese communism.

The idea, which the Post mentions as well, is that these new outlets create a kind of arms race between the journalists and the regime. As communications technology (the Internet, text messaging, blogs, etc.) become available, it increases the strain on the bureauocracy to keep track of it all. Because they're decentralized and apadt the technology faster, the journalists and activists are ahead of the curve right now. If they can stay ahead, market capitalism and democracy should expand in China; if the regime finds a way to effectively embrace technology to stifle democracy, then communism will maintain its grip.

From the standpoint of the US companies, so long as they're seen as producing tools that can be used to encouraged democracy (even if they have to work with the regime to get into the market), they can stay on the positive side of the issue.

10:58 AM  
Blogger roscoe p coldchain said...

I think that Yahoo, Google, and MS should try to use the "end justifies the means" argument here.

The Chinese communist regime is not going to change without outside influences. Information and knowledge can be incredibly empowering. If these companies, particularly the search engines, can make the argument that they will help the Chinese people by being there (even in a censored form) then I think the American public will be forgiving.

As Bob Wiley said, "Baby steps, baby steps."

12:27 PM  
Blogger skeeba said...

A couple of response note: One, does anyone think that these companies think the Chinese have an opinion of America's opinion and what lawmakers are saying? Let me answer that, no. Does anyone here care what the Chinese think? Let me answer that too, no! Therefore, why should a company invest in the safe integration of the two? It shouldn't and as long as Google and Yahoo! continue to understand that, they will be fine managing the issue enough to keep it quiet. Until...the Olympics! Yes, the Olympics folks. Sandwiched in between both political conventions in the summer of 2008, all eyes will be on China and, most importantly, all advertising, a major communications vehicle. I am willing to bet these companies are already developing their communications and advertising strategies for 2008 because and ad will be more than an ad. It will be a component to an overall message about where a company stands in China and what they are doing about their horrendous government and their freedom-hating. These companies will have to do something b/c folks runnin' for pres are going to exploit anything and everything China to send a message. (Okay, that's enough from me; I've talked too much.)

1:32 PM  
Blogger BlueGirl said...

Talk about Google violating its' own motto. I find the WP article quite interesting. Obviously Google, etc. goal is to be successful, as they are in the U.S.

However, achieving their goal through means that violate their mission statement are hypocritical and troubling. For this reason, from a PR standpoint, I would reccommend that Google lay low and not create a battle with the Chinese or with U.S. media. Defending themseleves would just make the situation look worse for Google.

2:24 PM  
Blogger SoCal Girl said...

I still have not recieved the second article, but in response to the first one: It's about time. It's alarming that any government could have such a tight grip on such a huge population. Obviously the people of China are very dependant on their government, but you would think that by now there would have been some sort of major uprising. I understand the logic of "if its not broken, dont fix it," but a country without freedom of expression IS broken and needs to be fixed immediately. I guess we see that though because we were born and raised in a country with different values and different priorities. Perhaps if we all had such a tremendous family history in China, we would not hold such freedoms so high. Why would we if we knew nothing different? It's a shame to us, but perhaps we're all missing important elements of Chinese culture that make them feel sorry for us as well. Just a thought.

2:59 PM  
Blogger green elephant said...

I think most of these companies are doing what they think is reasonably negotiable with an authoritarian government. Sure, they're appeasing the Chinses censors, but open markets themselves will persistantly weaken the government's grip. As long as major internet venues are there, people are going to have more opportunity to find holes.

The most vocal crowd these companies has to deal with is civil libertarians who exploit their blogs and Western press contacts to feed new stories like the two noted here. Many are not going to be satisfied with the delayed gratification of the foot-in-the-door approach these web corporations are attempting. Surrending fully to this group is not an option with Chinese markets. It might be best to stress that civil liberties are the ultimate goal of, at least, the search portals and predict that advances appear slow but are just a few years away from something major. Markets and those in control of those markets affect the field more than the corporate players who must operate within them. Getting the first point across might quiet these loud constituents enough to obviate further hearings in the near future. There's not much the Congress can do to directly influence this matter anyways.

3:03 PM  
Blogger Boston Dem said...

I agree with Green Elephant. I think that the internet has created a huge hole of information that work against oppresive governments like China. I think the the rise of the internet and the the rise of Capitalism in China and elsewhere have made many Communists governments look at themselves and evaluate whether they were doing the right thing. Hong Kong has certainly proven to the rest of China that a free market economy of commerce and ideas are not all that bad and I am hopeful that technology innovations will help the rest of China catch on in an effortive to bring down the Communist government.

1:27 PM  

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