Tuesday, March 23, 2010

China’s Aimlessness Troubles Business Leaders

If you go by the headlines in the Chinese press, the Chinese government has succeeded in hounding Google out of the country. Google says it will try to keep its China office open, but the air of resignation in the statement suggests that the best they are hoping for is for a few more months, or perhaps just a matter of days, before uniformed officers surround the building and order everyone out.

China’s move in expelling Google — the current actions come, remember, after a highly organized network break-in to Google servers on a scale that could only have been managed by a collaboration between the Chinese central government and organized crime groups located within that country — will serve to reinforce its new reputation for aimlessness and an enigmatic approach to business regulation.

Google’s move to the friendlier confines of Hong Kong is not the only current headline that reflects a decline in China’s business reputation. Here are two others from last weekend:

“Rio” in that last headline is Australian mining company Rio Tinto, and while the Chinese government has tipped the trial as a warning to Australia, no one in China or Australia appears to be able to say what Australia is being warned about, except perhaps to be wary of China.

It is not just foreign businesses that are worried about the new direction of the Chinese government with respect to business. The Rio trial has the whole Chinese mining industry worried, and the word among Chinese business seems to be that this is a good time to hold back, keep a low profile, and hope not to be noticed — a far cry from the go-go spirit of Chinese business two or three years ago.

China’s central government appears to be worried about losing control of the country, yet both foreign and domestic businesses seem to be more than willing to cooperate with the government if it would give any clear guidance, or even any sense of direction. But the government has recently offered only vague threats, crackdowns, and retaliation with no guidance attached. Google, for example, has no idea how to respond to the Chinese government’s effort to break into its servers, because the Chinese government’s only statements have been a combination of threats and denials. I can only assume that the Chinese government really does not know where it is going, and as a result, there is a significant chance that it is going nowhere.