Google vs China: Lessons in good corporate communication

Right when I am in the middle of Googled by Ken Auletta and, fresh after reading how companies in China are improvising, expanding and acquiring to make the country a manufacturing super-hub, comes the Google China standoff. What better time? The first thought that comes to mind about this story is that it is unique. A company versus a government? There maybe a few cases involving Russia and Venezuela but, initiated publicly by the company? None that I can think of. Though a lot of my friends have mentioned that Google has a small share of the search market in China and has nothing to lose, I personally believe that the potential of lost business is huge considering that Google is now also entering the phone business. What is most interesting is how Google has garnered headlines and moral support all around. An example of really great corporate communication. Of course the real ramifications are even bigger if you realize that with the kind of data Google has about each one of us - our inboxes, preferences, blogs, read lists and what not - one wrong step could have been a disaster.

This post on google's blog explains the Google's new approach to China is amazingly well written. David Drummond, company Corporate Development and Chief Legal officer explains that the company faced a security breach and its intellectual property was stolen. That is nothing new for IT companies. They face these kinds of attempts regularly. The next few paragraphs take the story to completely different level. According to the post many other IT companies and inboxes of human rights activists were targeted. Google suddenly seems to be taking a stand on behalf of other companies and also supporting human rights. A security breach is successfully converted into an opportunity for moral high ground. China's bad reputation makes things easier. Grade B+

Secondly, Google takes special care to assure us that no information was hacked except for two accounts to ensure that you and I who use Gmail everyday don't feel unsafe while logging in into our inboxes next time. The company safeguards itself by mentioning that accounts of those supporting human rights activists in China might have been regularly accessed through malware. Yesterday evening when I logged in to my inbox, I also noticed that a red label on the top right hand corner. It explained my mail had reached me via the secure 'https' protocol. Grade B+ with a positive inclination

The last paragraph then establishes Google as reasonable and all for the good cause. No wonder the Wall Street Journal reporter links it with Google's motto of Do No Evil. The company is willing to discuss and negotiate with the Chinese government. It is no longer willing to censor search results at http://www.google.cn/. What could have been a privacy debacle for Google has been converted to a battle in support for privacy and human rights. Grade A.

What do you think about Google's handling of the situation?

Globalization & FDI: The winds of change

I have been interested in the phenomenon of Foreign Direct Investment for a while. Till a few years ago, FDI implied the flow of foreign funds into a developing country. The direction was almost taken to be granted and the thoughts of India investing in Europe or Americas didn't cross my kind. Money flowing into the economy was an important indicator of the country's standing and opinion in foreign markets. An important proxy indicator of the possibilities, untainted by government statements. The last ten years of growth have however bought us to a new ground; winds of FDI now clearly blow in both directions.

There is this interesting editorial in Financial Times that shows how the growth in emerging markets has affected the flow of FDI. The article points out that FDI arising out of BRIC nations, Indonesia and South Africa has risen from a mere $10bn in 2003 to $12bn in 2008. A growth of 1100% percent. I remember a headline from the WSJ marketplace front page section about a Chinese company (Sichuan Tenzhong) bidding for the GM Hummer division. The reporter had used the word 'Unknown' literally in the headline. I searched the first four columns and didn't find the name of the company mentioned anywhere.

Coming back to the FT article, it uses four recent examples from the automobile sector involving mergers and purchases by Chinese and Indian companies. Next important learning most of these FDI transactions are M&A transactions and not Greenfield projects. A comparatively easier route with ready access to talent and technology and also a much faster path to growth giving these companies an immediate foothold. To me it is also an indication of the speed of the changes to come.

For the companies in developed markets this therefore is a time of reckoning. Clearly countries like Indian and China are no longer just places to outsource for cheap manufacturing and talent. They are also potential competitors and partners, presenting a need to engage and keep a tab on. The virtues of the 'next billion customers' in growing populations of China and India has already been extolled enough.
I am reminded of the principle of the state of equilibrium. It might be a useful reminder for those in power both in the developing and emerging economies.

You can access the article written by the Matthew Slaughter, associate dean and professor of management at the Tuck School of Business, Dartmouth here

Book Update: Just finished Dan Brown's The Lost Symbol.

Movie Update: Avatar is in a class of its own. Despite its over the top second half, Three Idiots is thoroughly entertaining. Sherlock Homes is a well shot and acted period drama with an unconvincing Dan Brown style story