Google challenges Great Firewall, maintains some traction in China

Posted by Lydia Leavitt

Only a year ago, Beijing threatened to kick Google permanently out of China over a disagreement over censorship laws.

Fast forward to the present and Mountain View says its dealings with Chinese advertisers are growing - even as the company loses ground in China’s search market.

Although the future of Google search in China looks relatively bleak at this point, the company says it's building its Chinese presence through advertising and sales. 

Still, analysts agree that without full-fledged search, capabilities, Google will fall even further behind the Chinese industry leader, Baidu.

Indeed, mainland users can currently access Google's Chinese-language site in Hong Kong. However, Beijing's filters often make page loads quite sluggish.

"Chinese companies will think twice before they can have any kind of relationship with Google," said Edward Yu, president of Analysys International, a research firm in Beijing.

Still, Google is selling ads on behalf of local websites or companies who hope to reach customers outside of Beijing.

"Google's revenue in China has grown year-on-year," said a company spokeswoman, Jessica Powell, in an e-mail to the Associated Press.

"Our business in China is doing well. We have hundreds of partners - large and small - who we continue to work with."

Despite the growth, Google’s relationship with the Chinese government has been rocky, with Mountain View claiming the Chinese government recently blocked access to Gmail and made it look like a technical difficulty.

Meanwhile, Beijing is investigating Google for possible tax offenses.

Analysts estimate Google’s 2010 China revenue at 2.6 billion yuan ($409 million), which accounts for less than 1.5 percent of Google’s global revenues. Since Google’s China search traffic fell to 19.6 percent in the last quarter of 2010 from 30.9 percent during the first quarter, Baidu search share rose to 75 percent.

Looking forward, Google hopes to implement Google maps within the country; a challenge as new regulations tightens control over online map services.

"Google maps is one of the services that people still like a lot," said Citigroup analyst Alicia Yap. "[Of course], if they can't provide the service in the future, people will use Google less and less."

(Via Associated Press