Trade protectionism behind Google's pull-out
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Normally, only labor intensive industries such as toys, shoes and socks, shirts and tyres in the U.S. resort to trade protectionism against China, because China has competitive advantages in these industries. But the U.S. is the market leader of the internet economy, which needs a great amount of capital devotion and constant technology upgrades. As a result, when US internet companies first came to China, they put themselves in a superior position and were confident of their competitive strength. However, these US internet giants haven't been able to exceed their Chinese rivals.
Apparently Google cannot compete with Baidu in terms of the market share in China. According to statistics released by Data Center of China Internet (DIIC), in the first half of 2009 Baidu held 81.9 percent of the total market share, over 12 times larger than Google's 6.7 percent. On the other hand, Google has an obvious dominance in the world market. Last June, Google owned 68.9 percent of the global search engine market, while Baidu only had a market share of 6.9 percent. Therefore Google's having a hard time accepting its current failure in the Chinese market, but there is nothing the search engine can do about it. And that's why Google adopted trade protection strategy.
US internet companies are completely refusing to acknowledge the real reason for using trade protectionism against China. They haven't got a clear understanding of user base's importance in the internet sector. In the internet age, user base is also a key factor to success, besides technology and capital. The reason why their Chinese counterparts succeeded is because they take internet users seriously and made great effort in building their own user bases. US internet firms should therefore drop protectionism and try recognizing the features of Chinese internet market. Only in this way, can the internet companies in China and the U.S. cooperate and share resources.
The author is an assistant researcher with the Institute of Journalism & Communication, Chinese Academy of Social Sciences (CASS).
(The article was translated by Yan Pei.)
