Just a few short years ago, I would sit in my business strategy classes, working on my MBA, and all the talk; all the strategy being developed to expand large corporations involved – in no small part – entering and doing business in China. Here we are today, January 13, 2010, and it looks like there are rumblings that China – as the key place to take your business – may be loosing favor.

Sure this is a departure from the normal small business and technology writing I do here, but I truly believe that no matter how our business and political relationships with China shake out, we will all feel the effects, for better, or worse.

Google, the small web search company that makes billions in online advertising revenue released a statement today saying that, even though the country represents 1/6^th of the worlds population, that it just may be happy running the other 5/6^ths of the worlds internet search and advertising stream, at least until China changes their online, and corporate policy.

Google linked its decision to sophisticated cyber attacks on its computer systems that it suspected originated in China and that were aimed, at least in part, at the Gmail accounts of Chinese human rights activists.

Google said the attacks took place last week and were directed at about 34 companies or entities, most of them in Silicon Valley in California, according to people with knowledge of Google’s investigation. The attackers may have penetrated elaborate computer security systems and obtained crucial corporate data and software source codes, though Google said it did not itself suffer losses of that kind.

While the scope of the hacking and the motivations and identities of the hackers remained uncertain, Google’s response amounted to an unambiguous repudiation of its five-year courtship of the Chinese market, which most major multinational companies consider crucial to growth. It is also likely to enrage the Chinese authorities, who deny that they censor the Internet and are accustomed to having major foreign companies adapt their practices to Chinese norms.

Even three and four years ago, when everyone was adopting plans to enter China, we were all aware of the greats risks involved in that endeavor. You ran the real risk of having your proprietary technology reverse engineered, and sold at a price undercutting your brand and revenue. Because the companies taking the technology were government sponsored, you had little recourse to defend your patents. The rules for doing business in China are so complex that, often times, it requires the creation of an entirely new company just to get your brand and products into the country. And forget about getting your money out.

None of what I just said even takes into account what many financial experts claim is an impending burst in the over inflated, ponzi-scheme bubble that is the Chinese economy. In short, the country has overbuilt for demand, inflate prices through government sponsored sales to holding companies, all in a book-cooking process that would make the Mafia families of the United States green with envy.

So what is a company with global aspirations to do? It depends. Given that a major correction to the Chinese economy will happen, it may be best to wait-and-see. I would also argue that until Government practices become more conducive to global commerce, and the risk of investing in the country becomes less, you may be better served improving your business practices locally.

Then again, the bigger the risk, the bigger the potential reward. But is that reward going to be worth it when you find three new competitors using your technology?

What Google has shown to world is that just because it’s a big emerging market, China may not be the best place to do business. And if Google does pull out, they will not be the only ones. I just hope that the economic fallout stays in the business realm, and does not encroach on the social. China just could be the match that lights the next big war.