Thursday, January 14, 2010


American companies operating in foreign countries face lot of problems from the local government and politicians. In many countries, they are asked to give bribes and do other illegal stuff.

Should American companies doing business abroad uphold American laws and values when dealing with local authorities? There are lots of opinions for and against. Those living outside the United States are of the view that these companies should obey the local law. Those living in the United States argue that these companies should ignore the local law if they are asked to do something that USA would consider as illegal.

Take for example Google. They have a huge presence in China. They are not number one there, yet. It is about to become number one in China. China has 388 million internet users. Google earns billions of dollars every year from their Chinese operations. They have a tremendous future growth potential.

China, which is not a democratic country, has asked many “favors” from Google. And, Google has cooperated with them to some extent. It abided by Chinese requests to censor its search results. If any one inside China wants to search for “Tiananmen” or “human rights” or “Falun Gong” they will get almost nothing. Lot of people in USA criticized Google for this. They complained that Google is censoring information to please Chinese authorities in order to develop the Chinese market.

Recently Chinese hackers tried to break into the Gmail accounts of Chinese activists. The attack was unsuccessful.

Finally, Google said “enough is enough”.

Google has made a surprise move --- it's threatening to pull out of China, if it doesn't see an end to state-controlled censorship and mysterious cyber attacks on some of its Chinese e-mail users. The company says it can't tolerate increasing Internet censorship --- and the government's reluctance to put an end to cyber attacks on human rights activists who use Gmail."

Google said that it was sharing the information not just because of the security and human rights implications "but because this information goes to the heart of a much bigger global debate about freedom of speech".

Kudos to Sergey Brin and Larry Page.

Google's decision certainly sets an example in terms of a company trying to do what's best for the user and not just whatever increases the profit margins.

What does the Chinese government officials say? “We are not censoring anything. We are only doing our jobs protecting our country from criminals, terrorists and others who want to destroy our country”.


  1. hmmm that was a good decision by google people...

    I just have one thing to say here..

    "Should American companies doing business abroad uphold American laws and values when dealing with local authorities?"

    They must abide by the laws of the country they are dealing in and cannot ignore the law simply because it is illegal in your own country..say for example - keeping a gun without license is legal in US but not in India..does it mean that an Indian Company should not sell guns in US to people who do not have a license just because it is illegal in India?

    this is my opinion completely..

    nice post SG :)

  2. Thanks for your comments Neha. I am glad you liked this post.

    In your example, it is upto the Indian comapny to decide if they want to uphold the moral values of India or make some quick money.

  3. Thats a nice move by Google...

    American companies or for that matter any companies should abide by the local laws. It is true that they are asked to bribe or manipulate...but thats because of few corrupt officials.

    It is absurd to be feeling that these companies should ignore the local law if they are asked to do something that USA would consider illegal. You are present in a country to grow and are reaping profits but you want to ignore local rules just because your home country considers it illegal?

    Not justified.

    If not possible, just pull out!!

    An organization cant change the rules or laws of a country; they should not interfere too...

  4. Thanks for your comments Insignia. You are right. If a company considers a local law is illegal or immoral, they should pull out. That is what Google is doing in China.

  5. An American man (Caucasian) went to India and as he walked around the city he saw sooo many Indians so he said out loud – “Wow, there sure are a lot of foreigners here.” Then a local person tells him – “No sir, we are not foreigners…YOU are the foreigner in our country.”

    If you are in a foreign country then you MUST obey and abide by the laws of that country.
    This holds true for the individuals who travel anywhere so why should it be any different for corporations?
    When Google was abiding by Chinese local laws that was the correct thing to do.
    Regardless of how deplorable the moral standards are – if you want to do business there (or travel for vacation) then you must obey the local laws.
    If you don’t like the local laws then GET OUT. Nobody is forcing you to stay.

    Google didn’t like the local laws so now it has to weigh the almighty dollar versus morality.
    Google made a decision of the heart, soul, and mind…instead of thinking about their wallets, pocketbooks, and bottom line.

    Kudos to Google.

  6. Thanks for your comments The Cagey Bee. Yes, companies should abide by the local laws. But to a certain extent only. If the local laws are immoral or against the moral values, then that company should get out, like Google is trying to do in China.

    There have been 2 examples in India also. They are:

    Coca-Cola was India’s leading soft drink until 1977. Then the Indian Government ordered Coca-Cola to turn over its secret formula. They considered this as an illegal order. Therefore, Coca-Cola closed their operations in India. They returned to India in 1993 after India’s liberalization policy.

    IBM also left India in 1977. The Government of India came out with a ruling that if a product was made in India, its source code had to reside in India. IBM decided to leave India rather than complying with this order. They returned in 1992 after India’s liberalization policy.

  7. While a company should comply with local laws, in this case - it is interference with their company activities - and Google Search is supposed to be unbiased! Good decision by Google. But does China care?

  8. Thanks for your comments Radha. China may not care now. If more companies leave China that will make them to "care". This is economic necessity.

  9. "Those living outside the United States are of the view that these companies should obey the local law."

    Absolutely. No question about that.

  10. Thanks for your comments Indian Pundit. If they do not like the local government's orders, they should get out like Google is doing in China and IBM and Coke did in India.

  11. I was expecting a humuorous take on this issue from you, to be frank ;-)

    Regarding the post & current confusion, I think Chinese better stick to Baidi or Baidu, whatever their other search engine is!! Nice post SG.

  12. Wish you a very Happy Makar Sankranti and Happy Pongal.
    Very well written. I liked your post very much.

  13. Thanks for your comments lostworld. I am sorry to have disappointed you. I will make it up. I am writing one now and it will be published at 9AM Monday Indian time.

    Chinese search engine is BAIDU. (Their Indian subsidiary is called NAIDU.) ha ha ha

  14. Thanks for your comments Babli. Happy Pongal to you and your family.

  15. Nice post ... continuation of How Google did what Obama could not do --- stand upto the Chinese ....

  16. Thanks for your comments Sravanthi. I am glad Google is standing up to the mighty government there.