The colorful love-hate relationship between Beijing and Google (Nasdaq: GOOG) never seems to stop evolving, flaring up this time with extensive coverage in state-run media over big China layoffs at Google’s recently acquired Motorola cellphone unit. In all fairness, Motorola’s decision to lay off 1,400 China employees is certainly big news by itself, with the China reductions accounting for more than a third of a recently announced round of 4,000 global job cuts by Motorola. But that said, I have little doubt that domestic media are being quietly encouraged to report extensively on the cuts by Beijing leaders who still feel stung by Google’s 2010 high-profile decision to withdraw from the China online search market.
I’ll discuss further down what all this means for Google and Motorola in China over the longer term, but first let’s have a look at the latest news that is getting such widespread coverage in the Chinese media. Most of that coverage is focused on the size of the layoffs, which isn’t too surprising since China had become one of Motorola’s top global markets over the last decade, prompting it to set up extensive manufacturing and design facilities throughout the country.
The strong emphasis on China prior to its recent decline made it almost inevitable that a big portion of its layoffs would be in the country, which is certainly Motorola’s right as it tries to rescue its struggling business. But what Chinese media seem to be focusing on is numerous grievances by laid off employees, many of whom are complaining of unfair treatment and poor communication by Motorola. (Chinese article)
Such complaints are surely common whenever there are big layoffs, especially for a major company like Motorola where workers often feel their jobs are very secure. So it comes as a slight surprise that Motorola employees are being allowed to speak out so vocally and even demonstrate against the cuts, since local government often discourage such shows of protest. It’s also a bit surprsing that domestic media are being allowed to report extensively on both the cuts and the demonstrations.
That leads me to my main conclusion, namely that the high-profile coverage being given to these cuts is at least partly due to Google’s contentious relationship with Beijing, which certainly won’t help the company’s image in China. Despite its high-profile pullout from China’s search market in 2010 over disagreements about Beijing’s self-censorship policies, Google retains a strong presence in the country due to the widespread popularity of its Android operating system used in the majority of smartphones sold in China.
Beijing surely realizes the importance of Android to the cellphones developed by big domestic names like Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992), and thus can’t really kick Google out of the country completely. At the same time, it still resents the way Google withdrew from the search market in 2010, and seems to take any opportunity it can find to portray Google in a negative way.
So returning to the question I raised earlier: What does all this mean for Google and Motorola in China over the longer term? The answer is that the Motorola brand could have a difficult time recapturing its former glory in China, even if it manages to improve its global image, as local media will probably take any opportunity they can to spotlight problems at the brand. On a broader basis, look for the uneasy relationship to continue with Google and Beijing, as the 2 sides look for a more comfortable longer-term relationship that is acceptable to both.
Bottom line: Widespread reports of worker discontent after Motorola layoffs in China reflects the uneasy relationship between Beijing and Google, and will make a Motorola comeback in China difficult.
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