Google's search sites in China abruptly stopped working earlier this week, but the explanation for the outage got a little loosey goosey as the day wore on. The Internet technology powerhouse first blamed itself, noting a technical change, but later reversed course and pointed to the heavy hand of China’s “Great Firewall" -- even as service appeared to be back to normal.

Read Google Runs Into China's "Great Firewall" over at the AllThingsD.

What do you think is really going on?

Then, I read the following and find it terribly unsettling yet fascinating at the same time:

Why Foreigners Can't Win in China

And to top that off, which I didn't think was possible, I catch this disturbing piece related not to Google-China relations but to China, the country itself, that makes me want to never ever write about China again:

China Body-Dumping Case Highlights Clash of Values (I'll say)

All of this gives us an idea of the country and the people we are negotiating with.

Posted by: The Global Small Business Blog

One of my favorite thought leaders (Nobel Prize winner), Paul Krugman, explains how he thinks about the current China syndrome, and why he believes that most of the responses that he hears from fans are missing the point.

He focuses on three questions:

The macroeconomics of Chinese currency intervention, the fallacies of elasticity pessimism, and the political economy issue of how to deal with Chinese intransigence.

Capital Export, Elasticity Pessimism, and the Renminbi (Wonkish)

Agree or disagree?

Newsweek's Fareer Zakaria has a conversation with Google CEO Eric Schmidt about doing business in China despite the restrictions that Beijing imposes on Internet freedom.

Excerpt here:

Why did you make this decision? It surprised many people and many companies.

Google is a different kind of company than many others. The issue of operating in China was always complex for us. We were asked to accept a system of censorship that we were very uncomfortable with. But we had come to the conclusion that operating in China was better for everyone—us, the Chinese people—than staying out of the country. We have decided that we cannot participate in censorship anymore.

Read the entire interview here.

You might also check out Holman W. Jenkins, Jr.'s commentary in the WSJ (1/22/10): China, Google and the Cloud Wars (very interesting)

Refer to our blog post 1/19/10: Message to China: Stop Carving Up Cyberspace with Boundaries

My fellow readers, I am sure you have been following every last little detail concerning the China-based hacker attack on Google and as many as 34 other companies, including Adobe Systems Inc., Juniper Networks and Yahoo. As a result of the cyber attack and the fact that the China government continues to force Google to neuter searches, Google has threatened to pull out of China.

This is a very critical juncture in the history of international business but it's not the first time a company has walked away from China. Levi Strauss & Co., 17 years ago did too, and returned. Funny thing, Levi's brand is currently made in China and they just opened their 501st retail store in Beijing last November. What happened in between? Take a look at this.

But this predicament is different -- far more public thanks to the Internet (go Google!) -- and will most likely bring foreign-policy implications. It will be interesting to see what happens when Google shuts off the valve in China on censoring search results and how fast China's government blocks or shuts down Google.cn, if at all.

In the course of determining what really happened, we will unveil more evidence of weird things going on.

Needless to say I admire and respect Google's bold move here (tough place to be but I always like to see people/companies take a public stand, exhibit backbone and show a strong sense of world good) and it's in line with this fine commentary, appropriately entitled, "Google Gets on the Right Side of History," written by Rebecca MacKinnon, a fellow with the Open Society Institute.

My feeling is you can't be part pregnant; and when you are Google, you most certainly can't be part-search engine in China.

We'll keep you posted.

We talked about how China is on the fast track to economic domination here in Point No. 4 of our "10 Predictions That Will Shape Our Global Small Business World in 2010" report, but what about global domination for the "Snuggie" brand exported from the U.S.A. yet produced in China?

Read more here. After reading the article you might ask, "What is a Snuggie (pictured)?" Even I wondered. I think it's this.

What's your global domination campaign in 2010?

Take a good look. I bet they try harder.

'Avatar' Cracks Top 10 All-Time Domestically; No. 2 Globally

See how China consumers view the movie here.

Note: Our "10 Predictions, Forecasts and Trends That Will Shape Our Global Small Business World In 2010" is scheduled to be published first over at Small Business Trends (www.smallbiztrends.com) -- hopefully today (1/12). We'll let you know when it's posted. As a refresher, here's 2009.

Although this is after the fact, it's still interesting and relevant to see that small and medium-sized enterprises (SMEs) in China are looking for ways to expand their businesses internationally.

"One of the key goals of this year's fair is to build an efficient trade platform for domestic SMEs to expand their business in the global market," said Lin Ying, secretary-general of the organizing committee.

Learn more here.

Photo credit: China Daily

Gap Inc. announced plans to open a China store and expand on its e-commerce operations. In addition, they will be establishing e-commerce sites in the U.K. and Canada next year.

International store sales were $2.6 billion last year; roughly 19% of the company's total store sales. U.S. Online sales reached $1 billion last year.

To think they started out small. It gives us all hope that we can go from global small business to BIG business. They are now in a major turn-around mode with a huge international push.

Read more here.

There are so many things I don't know.

Here's one of a zillion:

China Newspaper, China English Newspaper, Global Times

More here.

In the past, China has taken a conservative profile in organizations such as the World Trade Organization (WTO). But now, its getting more adapted and flexing its muscles to global trade rules, as exemplified in its recent complaint to the WTO on an anti-dumping dispute with the European Union (EU).

Read more here and here.

The U.S. will fuel some growth in the coming years through exports to China and emerging markets but what other part of the world will lead the global recovery?

Find out here.

If you have the time and the funds, nothing beats a visit to a country you are about to do business in to fully understand and appreciate how the people live day-to-day. Even Pepsi CEO, Indra Nooyi, realizes this:

The visit, one sweltering morning last week, was part of a 10-day "immersion" tour of China for Ms. Nooyi, who is seeking to strengthen the Purchase, N.Y., company's business in emerging markets. "I wanted to look at how people live, how they eat, what the growth possibilities are," she said in an interview Tuesday in Beijing. What she has seen has persuaded her that PepsiCo's approach to the Chinese market "is good, but not good enough. The opportunities are so much bigger." The company's "model for China has to be vastly different."

Read the entire article: "Pepsi CEO Tours China To Get a Feel for Market."

And one of the final points made in the article by Ms. Nooyi is right in line with our Top 10 Global Trends For Small Businesses For 2009 report published January 21st (refer to No. 1: "Disruptive innovation will be both the coolest and hottest new growth strategy in 2009 because it will transcend all boundaries and transform businesses" -- quote by Laurel Delaney) is this:

Ms. Nooyi challenged her China team to come up with ideas for products that cater to China's large older population. She also called for more in-depth research into women who, in China, are likely juggling work and motherhood and making the key day-to-day consumption decisions for households. She says she's calling on her executives to think "differently and disruptively," encouraging them to look beyond the company's traditional businesses in China.

Are you thinking differently and causing a little innovative disruption at your company?

As exports declined, China's Alibaba.com came up with a strategy to make its service a lot more affordable.

A lesson for us all is in this story: How to position your business now for when exports recover.

Read more here.

Photo: (from left to right) Paul Chow, Chief Executive of HKEx; David Wei, CEO of Alibaba.com; Jack Ma, CEO of Alibaba Group; and Ron Arculli, Chairman of HKEx -- back when Alibaba.com commenced trading on the HKEx.