Google enter China assessment
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google entry in Chinese market assessment. brief timeline with descriptions of privacy issues faced by the U.S. company.Presentation of Chinese market scenario: competitors and clients need. ...

google entry in Chinese market assessment. brief timeline with descriptions of privacy issues faced by the U.S. company.Presentation of Chinese market scenario: competitors and clients need. Assessment of different entry models. evaluation of different alternatives strategies that the company may consider for the Chinese market entry. Solution to the case, providing one strategy for future success.

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    Google enter China assessment Google enter China assessment Presentation Transcript

    • Group D - Nicola Morelli, Han Zhou, Tiana Seymore, Jakob Mose Olesen, Luca Pignatelli, Franziska Zindl
    • AGENDA “We made the decision to enter the market because we believe in making information available and accessible“ Hold Values Over Profits “Foreign enterprises in China need to adhere to China‘s laws and regulations… …and shoulder corresponding responsibilities“ (Ma Zhaoxu Foreign Minister spokesman) (Google Communication and Public Affairs) Group D 2
    • COMPANY DATA • • • • • Founded by Larry Page and Sergey Brin August 1996: first version of Google September 1998: first office in California 2000: largest search engine in the world 2010: $ 600 million revenues in China – Revenues from 2004 to 2010 increased about 830% worldwide Group D 3
    • THE CHINESE SEARCH ENGINE MARKET IN 2000 Dimension: One of the largest Internet markets in the world Growth: High degree of expected growth Competition: Fragmented market, but sensitive to advertising Barriers: Highly protective government Cultural diversity: Lack of language knowledge ENTER Group D 4
    • GOOGLE IN CHINA Sept.: Entering Chinese market (24 million web pages in Chinese) 2003: #1 in search engine market Share: 34.8%; Baidu 2.5% 2000 Sept. 2004: Start of Google News Aug. 2002: Redirection to local search when typing www.google.com Sept. 2002: Set up of filtering system blocked access to Google Jan.: No censoring of Google‘s search results anymore Exit OR server located in China Market share: <30%; Baidu: 46% Mid 2005: Own server but censored results 2005 End 2009: Google was faced with a cyber attack Jun. 2006: google.cn was blocked 2010 2008: Baidu had problems try to regain market share Nov. 2004: Blocking of Google News forced to switch to Chinese version Group D Jun. 2009: -Remove `suggest` feature from google.cn - google.com + gmail were blocked - Research results only from within China 5
    • MAIN ISSUES Philosophy Revenues Stay Competition Government Group D 6
    • GOOGLE‘S PHILOSOPHY Making information available and accessible Making information universal Strategy for China Providing censored results was better than not providing any detail Providing more information for the Chinese and be a more effective service It will be better for Chinese web users, because ultimately they would get more information, though not quite all of it - Sergey Brin, founder of Google
    • MAIN ISSUES Philosophy Revenues Stay Competition Government Group D 8
    • REVENUES AND MARKET SHARE - CHINA 700 600 600 - Revenues from China were around 2% of Google's total global revenues - Revenues increased significantly from 2004 to 2010 (estimated) 500 436 400 332 300 212 200 123 100 64 0 2002 2004 2006 2008 2010 2012 - Market share started to drop in 2004 and 2005 from 34.8% (2003) - It lost its lead position in 2005 while Baidu became the top search engine - Market share increased gradually from 2006 to 2009 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Others Baidu Google 2003 Group D 2005 2006/ Q4 2007 2008 2009/ Q1 9
    • MAIN ISSUES Philosophy Revenues Stay Competition Government Group D 10
    • THE MAIN COMPETITOR • Chinese search engine (2000) • Amazing market growth – 2003: 2.5% market share – 2005: 46% market share • Extensive advertisement • Works with the government • Online music service • Mainly students 11
    • MAIN ISSUES Philosophy Revenues Stay Competition Government Group D 12
    • CHINESE GOVERNMENT First layer control - Internet police: 50,000 people (2007) - Monitor the Internet usage - Using filtering system - Through emails, websites and blogs, discussion forum Second layer control - Prevent some websites from entering, e.g. facebook, youtube -Block certain portions of websites, e.g. popular US news Google‘s Case • 2002: New filtering system that makes Google.com slow and unrealiable • 2009: • Threaten Google to remove ‘suggest feature` • Accuse Google of spreading obscene content • 2004: Block Google News in English • Google was unreachable about 10% of the time • 2009: • Stop Google's blog • Block google.com and gmail for several hours
    • MAIN ISSUES Philosophy Revenues Stay Competition Government Group D 14
    • THE SITUATION OF GOOGLE IN 2005 • Google faced a lot of blocking actions by the Chinese government since its entry in 2000 with google.com Exit OR - Continuous blocking of information by the Chinese government is against Google‘s philosophy - Significant loss of market share Stay - Following its mission to spread as much information to everyone as possible - Do not lose China because it is an important market - Revenues Group D 15
    • THE SITUATION OF GOOGLE IN 2005 • Google faced a lot of blocking actions by the Chinese government since its entry in 2000 with google.com exit OR stay From 2005, Google had its own server, a representative office and blockingCenter in China and- decidedits mission to the -Continous R&D of following to censor information by the by itself spread as most as information research resultsChinese government is against to everyone www.google.cn Google‘s philosophy - significant lost of market share - do not lose China as important market - revenues Group D 16
    • THE SITUATION OF GOOGLE IN 2010 • Google still faced blocking actions by the Chinese government despite its censoring of the search results on google.cn Exit OR Group D Stay 17
    • EXIT OR NOT? Exit Completely Yes Withdraw google.cn but keep engineers and programmers in China Exit China? No Group D 18
    • CRITERIA 1 2 Philosophy Revenues 4 3 Competition Government Group D 19
    • ADVANTAGES FOR GOOGLE Stay Partly exit Philosophy: •Make information accessible •Become the best search engine Exit Philosophy: •Uphold reputation Government: •Provide transparency to users Government: •Minimum interference Competition: •Keep market share Competition: •Close presence to Chinese Market Revenues: •Increasing globally Group D 20
    • DISADVANTAGES FOR GOOGLE Stay Philosophy: • Loss of reputation Users’ perception of Google as unstable •Adhere to Chinese standards Government: •Continuous censorship Partly exit Exit Philosophy: •Less information provided! Philosophy: •Less information provided! Revenues: •Loss of Revenue •Loss of jobs •Loss of future growth •Loss of current investment Revenues: •Loss of revenue •Loss of jobs •Loss of future growth •Loss of current investment Competition: •Loss of Chinese market share •Loss of future growth •Best search engine? Competition: •Loss of Chinese market share •Loss of future growth •Best search engine? Group D 21
    • RECOMMENDATION What should Google do now? Group D Stay 22
    • RECOMMENDATION – HOW TO STAY Market Government Partners Quality Mission Effectiveness Establish good relationship with the Chinese government - Adapt to the specific condition in China: culture, value, government policy, state law Continue to build local strategic cooperation partnerships - Mobile search service by working with China mobile - Cooperate with Sina and Tencent for alliance Make integrated and high quality search engine - Music, books, pictures, video, news - Google map, gmail, translation, photo, schedule software - High quality advertising service
    • TO SUM UP China - Exit or Stay We made the decision to stay in the market because we believe in making information available and accessible Google in China – main events 2000 (Entrance) 2005 (Stay??) 2010 (Stay??) Chinese Government – control Censored results Baidu – 2009 largest search engine in China Market share 2.5% ≈ 60% Market and Revenues – growth Revenues from China are growing with the number of users Stay – Final decision Cooperations + Service Group D 24