Google plots China growth

25 January 2012

BEIJING: Google, the internet giant, is seeking to develop its presence in China despite its high-profile difficulties in the country, with a particular focus on areas like online display ads and mobile.

In 2010, Google began re-directing people visiting its Chinese search site to an equivalent platform in Hong Kong due to concerns over censorship, but it remains keen to make progress locally.

Daniel Alegre, president of Google's Asia-Pacific unit, told Bloomberg: "There's a misconception that Google has left China. We never left China and we continue to believe in the market. It's a very vibrant internet market."

While analysts estimated that Google's headcount in the Asian market had fallen from around 700 to 500 recently, Alegre reported the opposite trend is currently observable.

"We've got some of the best employees at Google, and we continue to grow not only our revenue but our headcount in the country. So our business continues to thrive ... and we will continue to be there."

According to Analysys International, the research firm, Google took 16.7% of Chinese search revenue in the last three months of 2011, off 0.5% quarter on quarter, and down from approximately 36% before its dispute with the Chinese authorities.

Baidu, the sector's leading player, logged an uptick of 0.1% in its revenue share between Q3 and Q4 2011, to 78.3%, and Sogou, run by web company Sohu, enjoyed a 0.5% lift to 2.7%.

More broadly, Alegre argued Google's PC and mobile advertising businesses are both growing, as is demand through its display ad network. "The internet in China means a lot of things," he said.

He also suggested that one "overlooked" aspect of Google's strategy in China is attracting domestic brand owners hoping to reach customers in overseas countries.

"Because China is such an export-orientated economy, Chinese advertisers, when they're trying to find a worldwide consumer, come to Google because we actually have global users," Alegre said.

Looking ahead, the mobile web is set to be a key channel, and offers "phenomenal" possibilities. Google's AdMob network already services more than 1bn monthly impressions in China.

"We are focusing on products that are non-sensitive in the Chinese market, because we believe that those are the ones that will benefit consumers the most," Alegre said. "At the same time, we continue to improve our search through our Hong Kong website."

Data sourced from Bloomberg; additional content by Warc staff