Google Swallows Hard, Renews Effort In China

Google has had a tumultuous and ambivalent relationship with China, reflecting an internal debate about the importance of the vast market to Google’s future revenues and the compromises involved in operating there. Yet the literal and figurative bottom line is that it’s all but impossible for a US public company to resist the lure of the world’s largest internet and mobile markets even if it means compromising public principles.

For some context and comparison, Apple’s China revenues were roughly $13 billion in fiscal 2011. That’s about 12 percent of the company’s overall revenue.

While Google Executive Chairman Eric Schmidt would probably say there’s been no “reversal” or change of policy, the Wall Street Journal reports that Google is now “softening its tone” and “renewing its push” into China. According to the paper:

The search giant is hiring more engineers, salespeople and product managers in China and working to introduce new services for Chinese consumers, according to Daniel Alegre, Google’s top executive in Asia. In particular, Google is aiming to capitalize on its fast-growing Android operating system for mobile devices, online-advertising and product-search services to grow in China, Mr. Alegre said in an interview.

One goal, he said, is to introduce its Android Market, which offers thousands of mobile applications to users of Android-powered smartphones and tablets but isn’t available in China . . . The company also is trying to win over Chinese consumers with services that don’t require official censorship, such as Shihui, which launched in September to help people search among Chinese sites offering discounts at local stores. Google is also working to beef up its product-search service to help consumers find goods from online retailers.

According to various sources, China’s internet audience is close to 400 million people and its mobile subscriber population is roughly double that, or 800 million. According to China-focused iResearch the Chinese internet market looks like the following:

Below is iResearch’s ranking of the top 20 Chinese websites. Google is number 13 on the list.

Roughly two years ago, Google said it would no longer censor search results in China after a coordinated effort to access the Gmail accounts of Chinese human rights activists. The weight of evidence unearthed thereafter argued that the Chinese government or its surrogates were behind that attack, as well as subsequent hacking efforts directed at Google and other non-Chinese corporations.

Postscript: A Google spokesperson offered the following comment to us in response to this story: “Our position in China remains unchanged.”

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