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Google, Rio Tinto & The China Business Environment

Two stories – Google’s exit [1], and Rio Tinto’s trial [2] – have dominated the China business news over the past week(s). While the cases are very different (see some links below this post), they have appeared together in many reports, and conversations. This is because they both relate to foreign firms facing problems in China, and as they are both part of a wider story about the business environment (for foreign firms).

The changing business environment was reported by AmCham recently (VOA, US Companies Feel Increasingly Unwelcome in China [3]):

The wider story incorporates many aspects, but a non-exhaustive list of business issues (in addition to the general, headline-induced nervousness caused by Big Corporates hitting a seemingly hard Chinese Wall) includes:

As we have reported, there is no doubt that attitudes to foreign business in China have changed with the economic times. As China has developed it has relied less on foreign investment [6]. And, as economic crisis has gripped the world, it has emerged as a more confident political and economic power.

Successful businesses adapt to changing conditions, and there are still plenty of opportunities in China (especially in the more open, less sensitive sectors), but it is important to stop and challenge comfortable assumptions from time to time. Rio Tinto and Google have caused many companies to do just that – GoDaddy and Dell, are just two that have already appeared in the news:

But it is not all bad news, and China is trying to provide some reassurances, as the VOA article also notes:

Overall, our experience of talking to, and working with, companies is that there is still a lot of interest in China, and that good business is being done. Chinese officials are also being surprisingly open and engaged. The key is to understand both the opportunity and the risk (from a stakeholder as well as a market perspective), to plan accordingly (but also flexibly) for the long term, and to avoid politicising the issues.

Notes:

Some of the past week’s Rio & Google news for additional background:

Rio Tinto

• [Update 6/4/10]

RT @taniabranigan: Rio Tinto fires all 4 http://bit.ly/dCqpqB [9]“Clear evidence …they accepted bribes”; “ethical behaviour at heart of… 4:55 PM Mar 29th

Digging deep RT @goldkorn: RT @isaac: Rio Tinto hires Henry Kissinger as China advisor http://bit.ly/aC7hPn [10]力拓聘请基辛格担任中国顾问 3:52 PM Mar 31st

RT @chinahearsay: Latest China Hearsay: “Some Thoughts on the Rio Tinto Verdicts” http://bit.ly/aXj1M8 [11]— Rule of law, SOEs, crap like that 4:52 PM Mar 29th

10 years for Hu #RioTinto RT @wbaustin: Prison for four Rio Tinto executives in China http://bit.ly/9hxUX4 [12]8:13 AM Mar 29th

#RioTinto RT @taniabranigan: RT @limlouisa: All four guilty on all charges, wang yong gets 14 years   7:59 AM Mar 29th

10 years for Hu #RioTinto RT @wbaustin: Prison for four Rio Tinto executives in China http://bit.ly/9hxUX4 [12]

• BBQ for Hu? RT @NiuB: The closing of the Stern Hu [Rio Tinto] trial: a legal analysis (Chinese Law Prof Blog): http://bit.ly/cma1bR [13]10:14 AM Mar 21st via Echofon

• RT @aimeenbarnes: Rio Tinto employees “admitted to receiving several million dollars in bribes” in China. http://tinyurl.com/ygkdjlh [14]NYT 1:18 PM Mar 22nd via Echofon

• RT @shanghaidaily: Trial of 4 Rio Tinto employees ended in Shanghai, 3…contesting charges of stealing commercial secrets. http://xpo.sh/lq [15]8:17 AM Mar 25th via Echofon

• Monday for more Rio RT @vfchina: China: Date set for Rio Tinto bribe trial verdict – CNN.com http://vf.cx/2mbQ [16]2:54 PM Mar 25th via Echofon

Google

• RT @niubi: Official Google Blog: A new approach to China: an update http://bit.ly/9fJhW7 [17]7:41 PM Mar 22nd via Echofon

• And of “it’s not over yet” RT @goldkorn: “There’s a lot of lack of clarity” Sergey Brin on Google & China http://is.gd/aTErD [18]6:06 AM Mar 23rd via Echofon

• RT @imagethief: Agreed: RT @fuzheado: James Fallows interview of Google’s Drummond absolutely required reading http://bit.ly/aO2T1J [19]7:45 AM Mar 24th via Echofon

• Headline of the day! RT @China_Daily: Google is not God http://tinyurl.com/yddgusm [20]8:13 AM Mar 25th via Echofon