The Great Firewall of China

Google officially left China today after 2 months of debate and disagreement with how China’s government censors web sites and restricts content like explicit sexual content and other topics such as government critics. Google’s decision to move its China-based search engine and functionality from the mainland to Hong Kong recently opened its newest phase of the two-month-long debacle, separating the world’s most powerful Internet company versus the chinese communist government that very tightly restricts the Web in the world’s most booming market.

This move by Google was very clever as all they did was forward the google.cn traffic to the Hong Kong based search engine google.com.hk. This raises many issues for the Chinese Populous that have google accounts and can’t access them due to China’s major firewall restrictions. Chinese citizens with Google Adwords and Adsense accounts were left wondering what would happen to their money or online advertising campaigns. The great firewall of China has been the major showstopper for foreign companies to join the global market. No telling what kind of hacking the Chinese are capable of when data is being restricted and monitored at the Internet Service Provider level. With Google now leaving China this opens the door for many other issues between the U.S. and China.

Currency

Many economic issues have been raised between the 2 most powerful economies in the world: The United States and China. The main economic concern raised over the past few months fueled from the Google leaving China debate is the valuation of Chinese currency: the renminbi. Many economic nations feel that the yuan has been undervalued on purpose in order for Chinese production to stay cheap. This keeps Chinese domestic goods cheap and forces other countries to import these cheap Chinese assets. The weak valuation of the yuan has been proven by the recent surge in Chinese exports. The U.S. has threatened China with sanctions to stop exports if they don’t revalue their currency. Much more pressure will be raised as all the global economies start to recover.

Google Won’t Be the Only Company to Leave China

Wondering if Google will be the only foreign or U.S. company to leave China? Many other companies will follow Google’s suit and leave the nations booming cell phone and Internet market. Once the facts are released from the whole debacle and why Google made these decisions to leave China, there will be plenty of loopholes or ways around keeping offices in China, while still being able to sell products or services to the Chinese market. Google did this easily by redirecting their site and forcing the Chinese government to regulate.

Baidu

With Google officially leaving china, the main search engine market share holder in China: Baidu (BIDU) went to new highs on the U.S. stock market today. This not only proves how surging the global demand for the internet in China is, but it also shows how much of the market share Baidu currently owns in China. Google did not lose all of its market share, however investors felt differently about this issue. Look for other search engine giants like Microsoft’s new Bing and Facebook to take leading roles in the booming Chinese Internet market.