China is supposed to be too important to ignore, the promise of a market with more than 1 billion people too lucrative to pass up. Common business wisdom holds that no company can afford to ignore, let alone walk away from, China. But Google has taken the first step, redirecting search, news and image results from Google.cn to servers in Hong Kong, "where we are offering uncensored search in simplified Chinese, specifically designed for users in mainland China," the blog said.
Other aspects of Google's business, such as its Android mobile OS, will continue to be available in China, but Google isn't in the mobile phone business. Android was created to increase mobile Internet usage, and therefore drive up mobile demand for Google services and create new opportunities for advertisers. But Google's search engine can be easily replaced, as Motorola recently proved when it announced that its Android handsets sold in China would come with Microsoft's Bing set as the default search engine.
Despite the promise of talks between Google and the Chinese government over censorship rules and the public nature of Google's announcement, with its declaration that the company was willing to close its Chinese operations, if necessary, the outcome was predictable. China was never likely to change it's censorship policies, which have increased in scope and sophistication in recent years, over demands from a foreign company.
In the official blog post, Google Chief Legal Officer David Drummond said that "the Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement." Although Google claims its maneuver is "entirely legal" and "sensible," the company is well aware that China's response could be to block all Google services in the country, according to Drummond. For now, Google intends to continue research and development work in China, and to keep a sales team there.