Subject Code: | BUSM3097 | Subject Name: | Issues in International Business | Location & Campus (SGS or HN) where you study: | RMIT Vietnam | Title of Assignment: | Case study Assignment | Student name: | Tran Tuan Hoang | Student Number: | 3463819 | Teachers Name: | Thanapat Kijbumrung | Group Number: | 1 | Assignment due date: | 18/12/2015 | Date of Submission: | 18/12/2015 | Number of pages including this one: | 9 | Word Count: | 2339 | RMIT International University Vietnam Bachelor of Business Program Assignment Cover Page

GOOGLE STRUGLING TO SURVIDE
THE ETHICAL ISSUSES IN CHINA

I. Introduction
Google is the company who provide a wide range of services to both normal consumers and business. They are best known from their search engine while incorporating with other online technologies such as Gmail and Google chrome. While being one of the top company in the world, Google seem to be struggling when operating in China – the country with the largest number of internet user. Though Google is popular with their motto “Don’t be evil”, they were struggling to adapt with Chinese policy toward certain areas such as censorship and certain actions from the government toward Google prevented it from competing with Baidu –their local competitors. Consequently, Google officially leave china and redirect to Hong Kong in order to escape from the censorship of Chinese government in 2010. This report will analyze certain ethical issues occurred between Google.cn and the government of china. II. Ethics and its impact
In order to coexist with society businesses require to satisfy the society’s increasing demand of ethically responsible business practices (Joyner and Payne, 2002). Google has always put ethics in high priority during their business and it seem that their firm kept their promises with their customer while expanding their business to other area along with their slogan “Don’t be evil”. To be more simplify, their motto is to provide internet user the search results that are objective and unbiased. However, their strength has become their weakness when they come to china due to the government’s policies. The policy ask Google to censor some search result that relate toward some certain event of Chinese history. This policy also applied to other foreign companies such as Microsoft and Yahoo. In addition to that is the great fire wall of china which blocked certain website from oversea and redirect some result of the search to other results. For example, the search of “Tiananmen Square 1989” will have no result about the related event that occur in 1989 but it only show the tourism related site of Tiananmen square. This alone has become a barrier between Google.cn and their Chinese consumers. In the other hand, to protect the user’s information database Google unable to use most of their key service that help them make their way in the internet business such as Gmail, blogger and YouTube. Google.cn do not want to repeat yahoo’s action in 2003 when yahoo gave the authority information of their user and ultimately these users is arrested by the government. This action of yahoo was criticized as a heavy violation of human rights yet yahoo claim that this action is forced under the law of the country. Eventually, without their tool, Google.cn has been label as an unwelcome outsiders that lack of reliable services. Follow up the event of censorship, in 2010, Google was subject of a massive cyber-attack and it seem that Chinese government might have certain connection to the attack (Eko, Kumar and Yao, 2011). The attack forced Google to make the strategic move that is pull out the Google search engines out of china mainland. The issue lies in the pressure of balancing between ethical practices and obeying the legal system of China. In Carroll’s pyramid of CSR consist legal responsibility as the second layer which require firm to obey the law follow by ethics responsibility as the third layers. However, also in Carroll‘s work, the most important layer is the economics layer. The layer that relate to Google’ ability to generate income which may be low due to the barriers of censorship and recent cyber-attack. Other than that, the different in culture had some effects on Google’s negotiation with Chinese authority. For example, until now Google have not yet renew their license with the government after the incident of cyber-attack in 2010 the internet business within china is quite sensitive thus might be required a wide range of knowledge and technique in negotiation related directly to Asian culture (Tan and Tan, 2012).

III. Google’s response
According to Carroll’s work (1991) the legal responsibility might have a greater part in the pyramid of CSR compare to the ethical responsibility. While accepting the censorship to fulfill the legal responsibility with the government, Google.cn had to give up their main services like Gmail and YouTube so they could hold their ethics responsibility with their users. Google required to follow the law which is made by the government of china. Though in this case, the law of the government seem to violate human rights to freely trade information with other (Dann and Haddow, 2008). Despite that Google decide that the legal responsibility have to be prioritize rather than the ethics responsibility. Additionally, by complying with the authority, Google argue that they could improve the service for the internet users. To be more specific, while agreeing with the censorship, Google still notify their customer that this information is omitted under the law of the government of china. Therefore it might put pressure on both of their competitors and the government to pursue more ethical practices. This show that Google were balancing their ethical responsibility and the legal responsibility. In the other hand to response with the cyber-attack in 2010 Google has decide to withdraw the search engine from the mainland of china mean that all Google.cn will be redirected to Google Hong Kong where is not subject to Chinese laws that mandate censoring or filtering Internet content due to the international law. Though the withdrawal had negative impact, Google still maintained their office in the mainland and did their research and market their android smart phone. Eventually, Google’s licenses expire and they are forced to withdraw from the main land of china. Recently, in 2015, Google announced that they will comply with censorship law of china in order to get the license for the Chinese version of Google play – an app store for android base phone. This may be the mark of return to china of Google after the face of with government but Google still waiting for Chinese answer about the license for their comeback. The withdrawal displays that Google would not have compromised with the government if they had sign of violation the firm’s user’s right.
Google’s actions indicated the changes in the Philosophy of Social Responsiveness. There are four type of social responsiveness philosophies (Carroll, 1979) that describe four level of responsiveness. Google have move backward from defense philosophies to reaction philosophies then move forward to accommodation philosophy. To be more specific, while obeying the censorship of the government the firm only do what they are require to do which mean they address the matter because they are forced this defense philosophies. Next their withdrawal from china indicate the first level - reaction philosophies. The firm finally make their comeback when they bargain with china about the censorship which reveal that they are a company with accommodation philosophy. These changes show the process of response from Google to ethical issues. They did not passively address the censorship as the result obeying the law and treat it as a condition when entering the new market.

IV. Analysis toward Google’s action
Despite the process of coming back to china from Google indicate their improvement in social responsiveness. Google seem to take a significant period of time in order to achieve so. Thus lower their income and waste resource due to the withdrawal. Furthermore, the opportunity cost during the time of withdrawing away china add the loss of revenue even more. The issue lies with the fact that Google try to achieve both ethical responsibility and legal responsibility as the same time. Despite the fact that both is include in Carroll’s pyramid of CSR (1991) legal responsibility take a bigger layer compare to ethics. In order to hold ethical responsibility Google had given certain service that help generating income. At the same time, Dann and Haddow argued that by accepting the censorship, companies like Google and Yahoo had already violate the ethical responsibility aid the China’s authority in violating the Chinese citizen’s free speech right. It is not certain that Google’s notice about the omitted result will have any effect on the “Great Firewall of China”. Consequently, despite attempting to keep their responsibility with both government and the clients Google.cn had failed to keep up with their local competitors Baidu – a Chinese company one of the biggest telecom companies. In addition to that, Google also fail to hold economics responsibility with their stake holder. The pull out of Google placed their stakeholders in a long uncertainty wait because of their investment in Google.cn. The damages were not stop with the shareholder but it also affect Google partners due to the changes in contracts or high- cost exits from the market. (Tan and Tan, 2012) plus the market share of the company also fall accordingly the event. There is one other reason that lead to the struggle of Google during their time in China is the different in culture between the Western company and Asian country. It might be explain further that Google have built their CSR base on their domestic market without experimental implement to the new market. The strict policy of information also create the paradox against the company’s motto “Don’t be evil” which again enhance the difficulties in practicing CSR. In the past, china’s tradition and value has been tested due to the free flows of information. The people can access to any information in the world thus become a threat to the government‘s monopoly power over the society. Therefore the censorship is introduced. It seem that Google had underestimated these differences and only focus on the undeniably attractive side of the massive Chinese market which have the largest number of internet users. The matter have to be clearly analyzed in order to avoid such CSR crisis (Tan and Chow 2009). Finally, Google’s withdrawal will also add distance that is already wide between the firm and Chinese authority. Consequently, this jeopardize the company’s future plan in other area. For instance, Google are still uncertain about the license for the Chinese Google play despite that they agree with censorship of the country.

V. Strategic changes
The pull-out of Google might have negative effect on their stakeholder and their partners. Therefore such actions have to be consult with the Stakeholder theory requires that firms take both primary and secondary stakeholders into consideration and operate for both shareholding and non-shareholding stakeholders’ benefits (Donaldson and Preston 1995). This means that before taking enormous action such as depart from the market. Google should have a meeting with all of their stake holder hold a vote on the certain issues. After the vote result has reveal. Google may begin to work on future plan accordingly to the result. The vote will be hold on the decision to escape china market in order to protect the company motto toward its consumers or compromise with the authority and continue the business within this massive market with opportunity to expand to other area.
If the stake holder vote is to leave the area of china to protect the company’s consumer against the communist of china. The firm may carry out the plan as they had done but without the comeback in focus on another market. The pull out as discussed leaved negative impression of the firm with the authority. It may be wise not to come back to china in a period of time due to the business license issue. Instead of focusing on the massive economy such as china, redirecting to other markets in Asian region. The action can display to the consumer that Google refuse to practice unethically toward their users like their competitors Yahoo in 2006 this also demonstrate that the cyber-attack is an unfortunate event that take subject to the activist of China and Google will not let the same events occurred again. By redirect the assets from to other markets the company will able to hold their economics responsibility with their share holder through new investment and new contract hence the new market located in Asian may be more willing to negotiate with the firm after the event of pull out through the entry of green field or joint venture. The possible target may be Vietnam and Indonesia, these country currently have the level of technology that may compatible with Google. Furthermore it also indirectly put the pressure on china on the issue relate to free speech or free flows information.
The other option is quite opposite which is to stay and compromise with the government of china. According to Carroll’s work on the pyramid of CSR the layer of economic and legal responsibility are still larger than the ethical one. It mean that the firm have to prioritize the responsibility of the firm with their stake holder before their users as long as it follow the legal system of the country. This means that Google should completely collaborate with the China’s authority while using fully develop their service such as You Tube and Gmail in order to compete with other competitors such as Yahoo, Microsoft and Baidu. However, in the long term Google should redirect their investment in other area that are less sensitive than internet service such as mobile phone and software that relate to this certain area. Google has its reputation with the android software which is globally used. By slowly pulling out of the sensitive and competitive market Google might able to penetrate another potential market while prevent the recent CSR crisis to grow. VI. Conclusion Google.cn is certainly become a lesson for Multi National Cooperates to not underestimate the differences between western culture and Asian culture while practicing business that is relate to ethics. Google is the real example of paradox between western and eastern culture. The motto Don’t be evil become the burden in front of the strict censorship of Chinese government which is used to control the flow of information within the country. Future business should be more serious in analyzing the target market before they decide to expand their company to the new market.

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