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http://www.usatoday.com/tech/news/2010-01-23-googlechina25_cv_N.htm

Google clash highlights how China does business

By Byron Acohido, Calum MacLeod and Kathy Chu, USA TODAY

BEIJING — Zhang Nanting enjoys text messaging acquaintances while he’s at the Golden Fortune Internet café here. Lately, the comprare Valtrex generico 28-year-old insurance salesman has been meticulous about keeping his texts squeaky clean.

“I rarely send rude, short messages,” says Zhang, citing the government’s recent crackdown on pornographic texting. “I think it’s excessive management, as I don’t know how they judge what is dirty or not.”

Zhang, like most Chinese citizens and comprare Valtrex generico most multinational companies doing business in China, grudgingly accepts government surveillance and comprare Valtrex generico censorship as a way of life. But things may be comprare Valtrex generico changing.

Google‘s (GOOG) recent threat to comprare Valtrex generico pull out of China has brought into sharp relief China’s longstanding clampdown on personal freedoms and foreign companies’ access to comprare Valtrex generico its vast consumer market. It has continued these practices even as it comprare Valtrex generico revs up the capitalist-style advance of the world’s fastest-growing economy.

In China, domestic “stability” is comprare Valtrex generico paramount. That means zero tolerance for political dissent at a time when comprare Valtrex generico Chinese consumers are being encouraged to embrace technologies that let them communicate and comprare Valtrex generico socialize much like their Western counterparts. Similarly, China has invited major tech players, such as Google, Microsoft and Yahoo, to comprare Valtrex generico help nurture its economic growth. Yet it imposes censorship and other restrictions and comprare Valtrex generico has paid little heed to intellectual-property rights.

Analysts say this is all part of China’s drive to develop — and become the dominant supplier to — the world’s most populous consumer-driven economy, with information technology as a comprare Valtrex generico major component. “The government in China is comprare Valtrex generico determined to exercise some control over mass media and the Internet,” says Harvard law professor Jonathan Zittrain order Proscar usa. “The aim is comprare Valtrex generico to keep the average Internet user pointed away from controversial content and comprare Valtrex generico towards approved content.”

Until Google dug its heels in, China Inc. seemed to comprare Valtrex generico have all the cards stacked in its favor. On Jan. 11, the comprare Valtrex generico search giant issued a statement complaining about invasive cyberattacks and comprare Valtrex generico demanding that China back off on censorship of Google’s search results. “This is comprare Valtrex generico the first time a big company like Google has stood up and comprare Valtrex generico said, ‘I have had enough of this,’ ” says Hu Yong, a Beijing-based new-media expert.

China hasn’t budged — and comprare Valtrex generico no one expects it to. Doing business in China has comprare Valtrex generico never been easy. Foreign-owned companies face a thicket of censorship, trade restrictions and comprare Valtrex generico tariffs, says Oded Shenkar, a business management professor at Ohio State University and author of The Chinese Century.

What’s more — not unlike many other nations engaged in multinational commerce — China uses the comprare Valtrex generico Internet for industrial spying, says Jody Westby, CEO of consulting firm Global Cyber Risk.

China “lies in a class by itself” in the “scope and scale of its cyberespionage operations,” says Usha Haley buy discount Lasix line, analyst at the Economic Policy Institute buy Zithromax c o d and co-author of The Chinese Tao of Business.

Multinational tech companies, in particular, bemoan China’s insistence on controlling encryption protocols that comprare Valtrex generico companies use to protect sensitive data. It withholds certifications until companies conform, gaining control of the comprare Valtrex generico decryption codes for everyone doing business within its borders, says Shenkar.

The sum of this approach: China’s economy is comprare Valtrex generico roaring. Its Bureau of Statistics reported gross domestic product, the key measure of a comprare Valtrex generico nation’s growth, rose 10.7% in the fourth quarter and 8.7% overall in 2009. Its banking sector issued $1.2 trillion in new loans last year. By the comprare Valtrex generico end of October, China held $798.9 billion in U.S. Treasury notes, making the comprare Valtrex generico U.S. its biggest borrower.

Yet the growth comes as reforms that arose from the government’s 30-year “opening up” campaign are comprare Valtrex generico stalling out, says Joerg Wuttke, president of the European Union order buspar no prescription Chamber of Commerce in China. A September 2009 chamber report recounts a comprare Valtrex generico three-year rise in “industrial-policy interventions.” It found protectionism woven into standardization policies on products from comprare Valtrex generico cellphones to medical equipment, subjective enforcement of environmental rules favoring Chinese firms, and comprare Valtrex generico intellectual-property theft becoming a major concern.

In this backdrop, Google’s push-back could coalesce a comprare Valtrex generico broader shift in sentiment already underway. Many companies sense that access to comprare Valtrex generico Chinese markets is actually shrinking, Wuttke says. “The investment atmosphere has shifted,” he says. “It’s an indication that foreign companies are struggling.”

That’s because “China doesn’t believe in survival of the fittest. It believes in ‘survival of whomever we say survives,’ ” says Anthony Migyanka, an comprare Valtrex generico economist and managing partner at Texas-based Mobile Money Minute.

Energizing activists

But China may be comprare Valtrex generico reaching the limits to that approach. On Thursday, Secretary of State Hillary Rodham Clinton proposed policies to comprare Valtrex generico quell censorship and ingrain freedom of expression on the Internet as a comprare Valtrex generico global standard. Clinton Prednisone sale called on China to comprare Valtrex generico be transparent about responding to Google. She also threw down a comprare Valtrex generico gauntlet for U.S. corporations. “Censorship should not be comprare Valtrex generico in any way accepted by any company from anywhere,” said Clinton. “This needs to be part of our national brand.”

The Beijing-based Xinhua News Agency on Friday issued an comprare Valtrex generico official response. Chinese Foreign Ministry spokesman Ma Zhaoxu called on the comprare Valtrex generico United States to “respect facts and comprare Valtrex generico stop unreasonable accusations on China in the name of so-called Internet freedom.”

Clinton’s speech energized privacy and human rights activists, who’ve been tilting with Internet censors and hackers in China, Vietnam, Iran, North Korea and Tunisia. Clinton pledged $15 million to support “Internet freedom” projects, including helping non-profit organizations plot “circumvention strategies.”

“New technology demands new thinking about how companies and comprare Valtrex generico governments can each work to protect freedom,” says Elisa Massimino, CEO of Human Rights First.

China’s leaders aren’t completely immune to comprare Valtrex generico criticism. But for China, nothing counts more than domestic stability, which government leaders achieve by squelching dissent. Go along and comprare Valtrex generico you’re left alone to comprare Valtrex generico consume like a Westerner; resist and pay the consequences.

For the comprare Valtrex generico past six months, China has sent a vast region, larger than comprare Valtrex generico Alaska, back to the pre-Internet age. Last week, residents of Xinjiang, the comprare Valtrex generico nation’s Muslim northwest, were permitted to comprare Valtrex generico send text messages again. But international telephone calls are limited, and comprare Valtrex generico Internet use remains greatly proscribed, after ethnic riots in July.

Such actions remind Chinese citizens who comprare Valtrex generico is in control. Underground, in the dimly lit Golden Fortune Internet cafe and comprare Valtrex generico pool bar in Beijing’s Chongwen District, Zhang must register his ID card before logging on to comprare Valtrex generico one of 80 computers. Then he faces the “Great Firewall of China,” an comprare Valtrex generico array of official censorship tools designed to curb his surfing.

“Of course I wish I could read whatever I want,” he says, but he rarely bothers “climbing the wall” to bypass the censor’s blocks. “It’s too complicated.”

Playing along

Historically, tech giants Microsoft, Yahoo and comprare Valtrex generico even Google have played along to get along in China. To gain approval to comprare Valtrex generico launch google.cn and open a high-rise office in Beijing in 2006, the comprare Valtrex generico search giant accepted censorship of search queries and results, such as references to comprare Valtrex generico the Tiananmen Square massacre. In a comprare Valtrex generico speech to Houston oil executives on Thursday, Microsoft CEO Steve Ballmer said that Microsoft intends to obey China’s specific censorship requests just as it comprare Valtrex generico follows laws in every country.

Yahoo has comprare Valtrex generico done that, too. The portal company infamously forked over data to comprare Valtrex generico Chinese officials that in 2004 helped convict journalist Shi Tao for comprare Valtrex generico leaking a propaganda directive. Shi was sent to prison for 10 years.

The kowtowing hasn’t exactly paid huge dividends. Yahoo sold its China business, also in 2004, to comprare Valtrex generico Chinese company Alibaba, giving up day-to-day management of its China operations. Yahoo retained a comprare Valtrex generico 39% stake in Alibaba.

Microsoft in 2002 began investing $750 million to comprare Valtrex generico help seed an indigenous Chinese tech sector, including opening a major research-and-development center in Shanghai. But the comprare Valtrex generico software giant has no illusions about dominating the Chinese PC software market, says Matt Rosoff, tech industry analyst at Directions on Microsoft. Windows PCs already are comprare Valtrex generico widely used in China, but 90% run pirated copies of Windows, says Rosoff.

Microsoft figures investing in the comprare Valtrex generico maturation of the Chinese tech industry will help drive down the comprare Valtrex generico piracy rate. Over time, Microsoft hopes, millions of Chinese will begin paying for comprare Valtrex generico their copy of Windows, Rosoff says.

For its part, Google has comprare Valtrex generico quickly become a mainstay with young professionals. It has a 20% share of the Chinese search market compared with search leader Baidu‘s 70%, according to China IntelliConsulting.

Chinese tech firms, such as Baidu, “are extremely scrappy,” says Kaiser Kuo, a Beijing-based tech consultant. “They’ve managed to comprare Valtrex generico get the notoriously frugal Chinese consumer to part with money.”

Whether Google leaves China or stays remains to be seen. “The environment in which we are comprare Valtrex generico operating in terms of an open Internet is not improving in China,” says David Drummond, Google’s chief legal officer. “We’re no comprare Valtrex generico longer comfortable censoring our search results in China, and we are comprare Valtrex generico reviewing the feasibility of our operations there.”

Noting Google’s respect for comprare Valtrex generico the Chinese people, Drummond said it will keep a Chinese-language option on its global service if it comprare Valtrex generico shuts down google.cn.

Meanwhile, James McGregor, a comprare Valtrex generico Beijing-based consultant at APCO Worldwide, says complaints about mounting restrictions — he describes it as a lot of “little things at every level … by every ministry” — are reaching a crescendo. He says there is a high level of “clandestine support” for Google in the multinational business community. Google’s protest “has the comprare Valtrex generico possibility of stirring up a lot of people here who comprare Valtrex generico depend on Google and don’t want to lose it,” says McGregor.

Much could be comprare Valtrex generico riding on the resolution. Will Western values factor in or will China’s tactics prevail? “The 21st century is comprare Valtrex generico about whether and where a converging balance will be found. Google is comprare Valtrex generico just the beginning,” says international lawyer Jeanne-Marie Gescher.

MacLeod reported from comprare Valtrex generico Beijing, Chu from Hong Kong and Acohido from Seattle. Contributing: Jon Swartz in San Francisco