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Group D -Group D - Nicola Morelli, Han Zhou, Tiana Seymore, Jakob Mose Olesen, Luca Pignatelli, Franziska Zindl
AGENDA
Hold“We made
“Foreign enterprises in Chinaneed to adhere to China‘s lawsand regulations……and shoulder correspondingresponsibilities“
2
HoldValuesOverProfits
“We madethe decision to enterthe market becausewe believe in makinginformation availableand accessible“
(Google Communication and Public Affairs)
responsibilities“
(Ma Zhaoxu Foreign Minister spokesman)
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COMPANY DATA
• Founded by Larry Page and Sergey Brin
• August 1996: first version of Google
• September 1998: first office in California
• 2000: largest search engine in the world
• 2010: $ 600 million revenues in China• 2010: $ 600 million revenues in China
– Revenues from 2004 to 2010 increased about 830% worldwide
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THE CHINESE SEARCH ENGINE MARKET IN 2000
Dimension:One of the largest Internet markets in the world
Growth:High degree ofexpectedgrowth
Competition:Fragmented market, but sensitive to advertising
Barriers:Highly protective government
Cultural diversity:Lack of language knowledge
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the world
ENTER
GOOGLE IN CHINA
Sept.: Entering Chinese market (24 million web pages in Chinese)
�Exit OR server located in China� Market share: <30%; Baidu: 46%
2003: #1 in search engine market� Share: 34.8%; Baidu 2.5% End 2009: Google was faced
with a cyber attack
Jan.: No censoring of Google‘s search resultsanymore
Mid 2005: Ownserver but censoredresults
5
Aug. 2002: Redirectionto local search whentyping www.google.com Nov. 2004: Blocking
of Google News �forced to switch toChinese version
2000 2005 2010Jun. 2006: google.cn was blocked
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Sept. 2002: Set up of filtering system �
blocked access to Google
Jun. 2009: -Remove `suggest` feature from google.cn- google.com + gmail were blocked- Research results only from within China
Sept. 2004: Start of Google News
2008: Baidu had problems �try to regain market share
MAIN ISSUES
Stay
RevenuesPhilosophy
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GovernmentCompetition
� Making information available and accessible� Making information universal
GOOGLE‘S PHILOSOPHY
Strategy for China
� Providing censored results was better than not providing any detail� Providing more information for the Chinese and be a more effective service � It will be better for Chinese web users, because ultimately they would get more
information, though not quite all of it- Sergey Brin, founder of Google
MAIN ISSUES
Stay
RevenuesPhilosophy
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GovernmentCompetition
REVENUES AND MARKET SHARE - CHINA
64
123
212
332
436
600
0
100
200
300
400
500
600
700
- Revenues from China were around 2% of Google's total global revenues- Revenues increased significantly from 2004 to 2010 (estimated)
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0%
10%20%
30%40%50%
60%70%80%
90%100%
2003 2005 2006/ Q4 2007 2008 2009/ Q1
Others
Baidu
02002 2004 2006 2008 2010 2012
- Market share started to drop in 2004 and 2005 from 34.8% (2003)
- It lost its lead position in 2005 while Baidu became the top search engine
- Market share increased gradually from 2006 to 2009
MAIN ISSUES
Stay
RevenuesPhilosophy
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GovernmentCompetition
THE MAIN COMPETITOR
• Chinese search engine (2000)
• Amazing market growth– 2003: 2.5% market share– 2005: 46% market share
• Extensive advertisement
• Works with the government
• Online music service
• Mainly students
11
MAIN ISSUES
Stay
RevenuesPhilosophy
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GovernmentCompetition
CHINESE GOVERNMENT
Second layer control- Prevent some websites from entering, e.g. facebook, youtube-Block certain portions of websites, e.g. popular US news
First layer control- Internet police: 50,000 people (2007) - Monitor the Internet usage- Using filtering system
- Through emails, websites and blogs, discussion forum
Google‘s Case
• 2002: New filtering system that makes Google.com slow and unrealiable• 2009:
• Threaten Google to remove ‘suggest feature`• Accuse Google of spreading obscenecontent
• 2004: Block Google News in English• Google was unreachable about 10% of the time• 2009:
• Stop Google's blog• Block google.com and gmail for severalhours
MAIN ISSUES
Stay
RevenuesPhilosophy
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GovernmentCompetition
THE SITUATION OF GOOGLE IN 2005
• Google faced a lot of blocking actions by the Chinese government since its entry in 2000 with google.com
Exit StayOR
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- Continuous blocking of information by the Chinese government is againstGoogle‘s philosophy- Significant loss of marketshare
- Following its mission tospread as much informationto everyone as possible- Do not lose China because itis an important market- Revenues
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THE SITUATION OF GOOGLE IN 2005
• Google faced a lot of blocking actions by the Chinese government since its entry in 2000 with google.com
exit stayORFrom 2005, Google had its own server, a representativeoffice and R&D Center in China and decided to censor the
16
-Continous blocking of information by the Chinese government is againstGoogle‘s philosophy- significant lost of marketshare
- following its mission tospread as most as informationto everyone- do not lose China asimportant market- revenues
office and R&D Center in China and decided to censor theresearch results by itself� www.google.cn
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THE SITUATION OF GOOGLE IN 2010
• Google still faced blocking actions by the Chinese government despite its censoring of the search resultson google.cn
17
Exit StayOR
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EXIT OR NOT?
Yes
Exit Completely
Withdraw google.cnbut keep engineers and
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Exit China?
No
but keep engineers and programmers in China
CRITERIA
RevenuesPhilosophy
1 2
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GovernmentCompetition
34
ADVANTAGES FOR GOOGLE
Stay
Philosophy:•Make information accessible•Become the best search engine
Partly exit Exit
Philosophy:•Uphold reputation
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Government:•Provide transparency to users
Competition:•Keep market share
Government:•Minimum interference
Revenues: •Increasing globally
Competition:•Close presence to Chinese Market
DISADVANTAGES FOR GOOGLE
Stay
Philosophy:• Loss of reputation �Users’ perception of Google as unstable•Adhere to Chinese standards
Partly exit Exit
Philosophy:•Less information provided!
Revenues: •Loss of Revenue
Philosophy:•Less information provided!
Revenues: •Loss of revenue
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Government:•Continuous censorship
standards •Loss of Revenue•Loss of jobs•Loss of future growth•Loss of current investment
Competition:•Loss of Chinese market share •Loss of future growth•Best search engine?
•Loss of revenue•Loss of jobs•Loss of future growth•Loss of current investment
Competition:•Loss of Chinese market share•Loss of future growth•Best search engine?
RECOMMENDATION
StayWhat should Google do now?
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Government
Market Mission
Establish good relationship with the Chinese government- Adapt to the specific condition in China: culture, value, government policy, state law
Effectiveness
RECOMMENDATION – HOW TO STAY
Partners
Quality
Continue to build local strategic cooperation partnerships- Mobile search service by working with China mobile - Cooperate with Sina and Tencent for alliance
Make integrated and high quality search engine- Music, books, pictures, video, news- Google map, gmail, translation, photo, schedule software- High quality advertising service
China - Exit or Stay
We made the decision to stay in the market because we believe in making information
available and accessible
Google in China – main events
2000 (Entrance) 2005 (Stay??) 2010 (Stay??)
Chinese Government – control
TO SUM UP
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Censored results
Baidu – 2009 largest search engine in China
Market share 2.5% � ≈ 60%
Market and Revenues – growth
Revenues from China are growing with the number of users
Stay – Final decision
Cooperations + Service