Is this actually still true? I know initially they exited China because they wouldn't play by the rules, but they definitely re-entered China, and as far as I know, they did it by agreeing to censoring their search results in China.
My thought is that it's ok to deal with China as long as they play by our rules not their rules (such as censorship). If they see that they can still operate successfully under a system with freedom of speech, maybe they won't be so against it.
But yes, you do have to be careful not to let them become a large enough percentage of revenue that the company would be in danger if China started threatening to pull out.
I agree that if you don't want to beholden to foreign rules, then don't become dependent on foreign markets. But what is this "our rules" business? Google lobbying rules that's currently clashing with the EU. Or US foreign policy rules?