What if Google lists on Shanghai Stock Exchange?

At an investment forum in Shanghai one equity expert posed this intriguing question: What if Google lists on the Shanghai Stock Exchange?

The immediate connection from the audience is the dreary SSE index that has been lingering around the 2,000 points versus Google’s US$580 stock price, and it’s so exciting just to imagine the theoretical injection of such power to the Chinese stock market.

However, this hypothetical question goes far beyond a financial issue.

This reminds me that a while ago I heard that there were discussions among many senior executives in MNCs where Google was used as a case study to analyse business environment in China and the business development strategy in that particular circumstance, and also to debate on possible, even theoretical solutions for Google in China.

Would listing in Shanghai be that solution?

Putting the question aside first and thinking from a “reverse order”, listing in a major stock exchange would certainly help a company in many ways. For a country like China where the stock market is far from mature and perfect, it is a fact known to all that many top Chinese companies chose to list overseas, either in a more culturally adjacent Hong Kong exchange or a more advanced destination in the US.Baidu, the biggest search engine in China, is trading above US$220 now on Nasdaq which is something beyond imagination in this part of the globe; and Tencent went over 100 times up its IPO price at its peak on Hong Kong Stock Exchange; and Alibaba is now looking at the New York Stock Exchange with a record-breaking valuation.

But for an MNC aiming to list in a Chinese exchange, it would be a completely different story.When the HSBC was reportedly working to be among the first to list on SSE’s long awaited International Board a couple of years ago, it was part of the global bank’s strategic move to take the largest possible market share as China gradually opened the banking sectors to international players.

When Google announced to pull its search engine business out of Mainland China in March 2010, it instantly became an industry event of the year. There were numerous debate on the potential gains (among which, reputational, maybe), and losses (seemingly obvious to many).But nonetheless, for a company like Google, China market is still too lucrative to really give up, and in reality, the company’s step to retain its R&D team in China at the time to “pull out” or its later move to open an office in Shanghai were all very pragmatic and wise actions to take.

But after all, the pull-out in 2010 did hurt the business and only a more comprehensive come-back would help rebuild the business significantly.Consumers, especially the genuine tech-savvy or business driven consumers, like Google and many of them prefer Google over other service providers.Google search would provide much more colourful results than its competitors and the company provides a lot more products that the others can not.However they can’t afford the extremely poor accessibility to google.com servers or the loss of connection to their gmail inbox all the time.

The solution lies in a corporate affairs or public affairs strategy, whatever you call it.That strategy would need to make business sense but more importantly make sense in taking good care of regulatory and reputational risks for the company itself as well as all stakeholders.That strategy needs to be perceived primarily not as for the benefit of the company but to respond and contribute to the social and economic advancement in China under the current political environment and regulatory context. With the ever tightening scrutiny on foreign companies and what happened with Google before, a direct and shortcut to any come-back is unlikely.

Google got itself a cheerful (though irrelevant) Chinese name “谷歌” when first coming to China.When the company silently opened its new office in the most luxury business district in Shanghai Pudong in 2012 it gave its new outfit a lot of Chinese components and Chinese look, though its information service company registered under a different, less cheerful Chinese name “咕果” which sounds even close to "bitter fruit". But who cares.Google’s fans have been excited since then and asking about the company’s timetable of a “comeback”.

To solve problems related to business environment in China, you’ll need some creativity as well as understanding from the inside. At least Google is not in shortage of the former.

Who knows if someday we’ll see among the A-share codes a 90091.SH as a ghost ticker for Goog.sh?