Recently, Google created an international firestorm by threatening to pull out of China. Google cited a hacking attack originating from China as the impetus for its threat but the real rationale behind the move was quite clear: Google wants to play by different rules in what will be the most important consumer market in the world.
Google won praise in some circles for taking on the Chinese government and making a statement about censorship and human rights. Certainly, it does not look likely that Google will get what it truly wants, and while the outcome of Google's strategy (if there is one) is yet to be seen, I'm not the only one who thinks Google has likely made a big mistake by handling the situation as it did.
That said, Google's move put a spotlight on China and the rules foreign businesses must abide by if they want to compete there, so it's no surprise that Google's biggest rival, Microsoft, has decided to make a statement about its position vis-à-vis China.
In a post on the Microsoft Blog yesterday, Microsoft CEO Steve Ballmer laid out the company's stance:
Microsoft is committed to protecting and advancing free expression throughout the world, even as we work to comply with local laws in the 100+ countries in which we operate. In many countries throughout the world, Internet and technology companies must comply with laws that impact privacy and freedom of expression, particularly peaceful political expression.
He goes on to explain that Microsoft is committed to "principles promoting freedom of expression" and is "opposed to restrictions on peaceful political expression". He points to Microsoft's participation in the Global Network Initiative as evidence of Microsoft's interest in advancing freedom on the internet. At the same time, however, he gets to down to reality:
Engagement in China and around the world is very important to us, in part because we believe it accelerates access to 21st century technology and services and helps provide the widest possible range of ideas and information. We have done business in China for more than 20 years and we intend to stay engaged, which means our business must respect the laws of China. That’s true for every company doing business in countries around the world: we are all subject to local laws.
For those who applauded Google's offensive against the Chinese government, Ballmer's post will certainly make it easy to chastise Microsoft. After all, in seven paragraphs all Ballmer really says is "we support freedom on the internet but we have to abide by some laws that might curtail it".
Unfortunately, while Google's offensive against the Chinese government may be emotionally satisfying to some, Microsoft is taking the pragmatic approach that is unlikely to be as appealing. But Ballmer does make a point that is important to all global-minded businesses and entrepreneurs: "we are all subject to local laws".
Thanks to the internet, businesses can reach markets anywhere in the world without ever having to leave home. That makes it easy to forget that the rules at home aren't the rules everywhere else. Google's quarrel with the Chinese government has highlighted the fact that this can easily become a source of conflict. When faced with rules that make it harder to compete, or by rules that offend your moral sensibilities, it's easy to lash out. Microsoft certainly has plenty of reasons to be frustrated by China (piracy anyone?). The fact, however, is that it has been doing business in China for 20 years (far longer than Google) and has managed to maintain its interests without having a blow-up.
That offers perhaps the most important lesson to those looking abroad for opportunity: when you do business internationally, you had better pick your fights carefully. In China, however, a little Sun Tzu may go a long way:
The supreme art of war is to subdue the enemy without fighting.
Photo credit: D.Begley via Flickr.