Google Still Making Money in China

By Clint Boulton  |  Posted 2010-03-23 Print this article Print


4) So Google is Still in China, Right?

Yes, for now. Google left its sales and research and development teams there, which means some 600 Google China employees still have jobs. Google doesn't want to leave China, where there are 400 million Internet users ripe to put digital ads in front of via search and other Web applications.

5) That Means Google Will Still Make Money in China

Jefferies and Co. analysts said that as long as the authorities allow mainland users to access Google's Hong Kong portal, the Chinese advertisers would likely continue to advertise on that site. Why not? There is still good real estate in Google search, which garners about 33 percent of the market share in China, compared to Baidu's 63 percent plot.

6) But Google Is Vulnerable...

Jefferies analysts added this caveat: "By redirecting China traffic to an uncensored portal in Hong Kong, Google has effectively put its China business at the mercy of Chinese authorities, who could potentially cut off some or all levels of access to the Hong Kong portal from mainland China." Expect an angry Chinese government to do everything it can to stymie Google.

7) Can Google Preserve Its Other Businesses?

Gartner's Andrews said it makes sense that Google would go out of its way to preserve parts of its business that don't have anything to do with censorship. This would include, for example, selling its Android-based Nexus One phones in that country.

However, Google's Chinese partners will be reticent to do business with Google for fear of retribution from the Chinese government. "Partners are concerned the government will see doing business with Google as disloyal," Andrews said.  

8) And Yet...

James McGregor of APCO Worldwide in Beijing, who wrote the 2005 business book on China "One Billion Customers" said China had no interest in thwarting innovation of Android and other Google products. "They need Google in many ways," McGregor told CBS Marketwatch.

9) Google to Expand Elsewhere in Asia?

Some believe this move will pressure Google to expand in South Korea and Japan to retain a presence in Asia-Pacific markets. Google commands less than 50 percent of searches in Japan and 8 percent in South Korea, researcher comScore said.

10) To Baidu, Go the Spoils

With the Chinese government likely to further clamp down on Google and Chinese citizens upset about Google shuttering, Baidu stands to gain from this standoff. Expect the Google of China to gain some percentage points from Google over this affair.



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