1. MGMT3275 International Management
Dr. Victor Z. Chen (
UNC Charlotte
Course website:

2. Google.cn: A Synthesis Case

3. Search Engines What is your default search engine?
What do you like about it, compared to the others?

4. Google Inc.
Founded in 1998 by Stanford PhD candidates Larry Page and Sergey Brin
Brin emigrated from the Soviet Union at age six
Brin’s parents left to escape from “a repressive regime with limited political freedom”
At Stanford, Page and Brin quickly became “intellectual soul-mates and close friends”
After three years of rapid growth and success, they were reaching a point when they needed a professional chief executive for “adult supervision”
Google hired Dr. Eric Schmidt, a technology veteran in preparation for IPOs, which took place in and raised $1.6 billion

5. Google Inc.

6. Google Inc. Ten things we know to be true
1. Focus on the user and all else will follow
2. It’s best to do one thing really, really well
3. Fast is better than slow
4. Democracy on the web works
5. You don’t need to be at your desk to need an answer
6. You can make money without doing evil
7. There’s always more information out there
8. The need for information crosses all borders
9. You can be serious without a suit
10. Great just isn’t good enough

7. Algorithm advantage
Yahoo!
Human editors to classify information

8. Google vs. Peers
Search “movie where a surgeon can turn back time”

9. Google vs. Peers Google Yahoo! Microsoft
Algorithm-based search for speed and relevance
Started as a human editors-curated portal site
Late starter
Tied to MS users, e.g., 20% cash back

10. Google Inc. By 2008, Google’s revenue reached $21.8 billion.
Nearly all of its revenues came from two advertising products:
AdWords ($14.4 billion)
AdSense ($6.7 billion)

13. Google Inc. in CSA/FSA Matrix
Geographic boundedness
Demographic boundedness
Cultural boundedness
Economic boundedness
Regulatory and political boundedness
CSA
FSA

14. Google Inc. in CSA/FSA Matrix
Geographic boundedness
Demographic boundedness
Cultural boundedness
Economic boundedness
Regulatory and political boundedness
CSA
IT infrastructures
IT talents
A large user base
Capital
FSA
Speed
Thoroughness
Relevance
Democracy
Reputation for “Do no evil!”
Online Ad pays
Bandwidth
Secure servers
Working pros
Online payment (e.g., Credit card)
Sophistication
Info democracy
Unbiased, EN
Individualism
No censorship
Not authoritarianism

15. China’s context
socialism/nationalism and a long history of collective interest of social harmony/stability rather than individualistic interest of social change.

16. China’s context
laws that block sensitive information and websites that freely disclose it (e.g., YouTube, Flickr, Facebook, Wikipedia, Twitter, etc.)
“Great Firewall”
A host of government monitors and citizen volunteers

17. Establish a server presence in China and agree to self-censorship
China’s context
1. socialism/nationalism and a long history of collective interest of social harmony/stability rather than individualistic interest of social change.
2. laws that block sensitive information and websites that freely disclose it (e.g., YouTube, Flickr, Facebook, Wikipedia, Twitter, etc.)
“Great Firewall”
A host of government monitors and citizen volunteers
Two choices
Maintain an offshore server and force users to endure significant delays and instabilities caused by, e.g., Great Firewall.
Establish a server presence in China and agree to self-censorship

18. China’s context Language Alphabet vs. Logograph More dense, less space
No space between words
One character, multiple meanings
More clicks, less typing

19. China’s context
Users
Desks
vs.
Mobiles

20. China’s context
Users
Chinese: avg 25, seconds per page, 0.02 credit card/person
US: avg 45, 10 seconds per page, 2 credit cards/person

21. China’s context
Easterner vs. Westerner thinking

22. What do you see?

23. Are you thinking like a westerner or an easterner by personal culture?

24. Are you thinking like a westerner or an easterner by personal culture
Are you thinking like a westerner or an easterner by personal culture? (cont’d)

25. Are you thinking like a westerner or an easterner by personal culture
Are you thinking like a westerner or an easterner by personal culture? (cont’d)

26. Are you thinking like a westerner or an easterner by personal culture
Are you thinking like a westerner or an easterner by personal culture? (cont’d)

27. China’s context Users Chinese: browsing widely
US: focusing on upper left

28. China’s economic reform since Deng in 1978

29. Source: Brett, Pilcher, & Sell (2011)
Source: Brett, Pilcher, & Sell (2011). A new approach to China: Google and censorship in the Chinese market. Kellogg School of Management Case #590.

30. Source: Brett, Pilcher, & Sell (2011)
Source: Brett, Pilcher, & Sell (2011). A new approach to China: Google and censorship in the Chinese market. Kellogg School of Management Case #590.

32. Source: Brett, Pilcher, & Sell (2011)
Source: Brett, Pilcher, & Sell (2011). A new approach to China: Google and censorship in the Chinese market. Kellogg School of Management Case #590.

33. Google vs. Baidu Google Baidu Serving our users
Best search is defined as the most relevant info
Obeying the law (e.g., The Foreign Corrupt Practices Act)
Information democracy
Serving the users, including paid business users for their branding/marketing
Obeying the Chinese law

35. Now make a decision: Shall we renew Google.cn?3
China
Google
Conservatives
Reformers
Ideologists
Professional Managers
Cyber attacks
Privacy (e.g., Gmail)
Censorship
Presence in China
Conclusion
Overall Conclusion 2 1 1 2 1 1

36. Google Inc. in CSA/FSA Matrix: China mainland
Geographic boundedness
Demographic boundedness
Cultural boundedness
Economic boundedness
Regulatory and political boundedness
CSA
IT infrastructures
IT talents
A large user base
Capital
FSA
Speed
Thoroughness
Relevance
Democracy
Reputation for “Do no evil!”
Online Ad pay
Bandwidth
Secure server
Working pros
Online payment (e.g., Credit card)
Sophistication
Info democracy
Unbiased, CN
Indivualism
No censorship

37. Google.cn? IPR ICT Use Govt Regulations Internet bandwidth US 15thHK
9th
7th
3rd
2nd

38. Hong Kong SAR vs. China Hong Kong
Hong Kong Special Administrative Region (SAR) of People’s Republic of China
British Colony ( ), 99-year lease
Returned to China as a SAR, under “one country, two systems”
Allowed by China to continue to govern itself and maintain many independent systems for a period of 50 years
While China is an authoritarianism, HK has a limited democracy, sharing the President of China as their common chief of state but having its own head of government – Chief Executive of HK SAR.
While China’s legal/judicial system was built on its socialism legacy, HK’s is broadly based on the British common law.
While China uses Chinese yuan, which is not freely convertible until recently, HK uses HK dollars, pegged to US dollar.
While HK has its own police, it defers to China in military defense and international diplomacy.

39. Google Inc. in CSA/FSA Matrix: HK SAR
Geographic boundedness
Demographic boundedness
Cultural boundedness
Economic boundedness
Regulatory and political boundedness
CSA
IT infrastructures
IT talents
A large user base
Capital
FSA
Speed
Thoroughness
Relevance
Democracy
Reputation for “Do no evil!”
Online Ad pay
Bandwidth
Secure server
Working pros
Online payment (e.g., Credit card)
Sophistication
Info democracy
Unbiased, CN/EN
Indivualism
No censorship

40. Google.com to Google.com.hk
Source:
china_global_steinfield.pdf
Chinese IT workers
Chinese users

41. Additional Integration Benefits: Market failure / Tax
Select Measures of Market-Supporting Institutions
Category
Specific examples US
Hong Kong SAR
China Mainland
Strong property rights
Registration of private property (days, % of property value)
Legal protection of private property (1-10, 10 best)
Investor protection (1-10, 10 best)
Intellectual property rights (IPR) protection (1-7, 7 best)
15.1, 2.1%
7.2
8.3
5.4
27.5, 7.7%
8.4
9.0
5.8
19.5, 3.4%
5.0
4.0
Free and fair competition
Easy entry
Low government consumption (1-10, 10 best)
Low government enterprises/investments (1-10, 10 best)
Low corporate tax
Low other taxes and fees
No informal competition
5.6 days
6.4
8.0
40% 4%
Very low
1.5 days
8.1
10.0
16.5%
6.5%
31 days
3.7
2.0
25%
43%
57.6%
Low transaction cost
Credit (% of adults covered by credit bureau; depth of information)
Strong auditing/reporting standards (1-7, 7 best)
Low trading barriers (hours)
Free trade agreements
Bilateral investment treaties
Freedom of migration
100%, 8.0
5.5 7
None with HK or China
No visa to HK, needs visa to China
96%, 7.0
6.2 20
With China
No visa to China or US
0%, 7.0
4.4
103
With HK
No visa to HK, needs visa to US
Strong contract enforcement
High corporate ethics
Legal resolution of contract claims (days, cost as % of claim)
4.8
420 days, 31%
360 days, 21%
4.2
453 days, 16%

42. Belk College of Business UNC Charlotte
Contact
Victor Z. Chen
Belk College of Business
UNC Charlotte
+1 (704)
Course website: