Google (Nasdaq:GOOG) has been attacked. According to the New York Times, last week somebody hacked into its systems, and may have stolen corporate data and source codes. Google is blaming China.

As many as 34 companies may have been attacked by China’s Internet police last week, and Google is threatening to stop censoring its search results and exit the country altogether.

This is a time when we are reminded about the differences – and difficulties – of doing business in China.

Google and Yahoo! (Nasdaq:YHOO) both entered the Chinese market in 2006. They both had to agree to strict rules from the Chinese government. For all the progress China has made in opening up its economy, it still clings to the belief that it can control what the Chinese people see, read and believe.

So Google and Yahoo! had to agree to “censor” the Internet because certain search results will vividly show evidence of things that the Chinese government would rather pretend didn’t exist – like Tiananmen Square. A search for Tiananmen Square leads the Chinese Internet user to a blank page. At least it did…