Google's approach in China: buy Baidu?

[comment]

Google had the most search engine market share in China before 2002
and it started to decline.

At one time China government redirected Google's url to other destinations
for less than a week, then it yielded to overwhelmingly large amount of
email complaints from users.

That is how influential Google was. Not any more. Since that blocking,
Google's share has declined and now standing at 28% of market shares.

The blocking was rumored to be a conspiracy of local search engine community
who fear Google and want to dethrone it.

China government regards Google as flood and beast.
Google has a hard time in establishing a local branch in China
as it can not gain the trust from the government.
But why the same measurement was not taken on Yahoo?
There is one factor, yet an important one, Yahoo has a Chinese founder.
Google has none. Chief Yahoo Jerry Yang, while raised in US,
does speak fluent Madarin and knows some Chinese etiquette.
Jerry is still an Americanized Chinese. He did not grow up
in a Chinese soceity and did not have enough exposure on Chinese culture.
But that has nothing to do with why Yahoo did not do well in China
It has more to do with Yahoo's business approach and directions.
It is Yahoo who pioneers online advertising; however,
it is Google who got the online advertising business right.

Not possible to gain the trust (got any Chinese founder?)
Google looks at what Ebay and Yahoo did ( they bought local outfits)
and figures that they have to do the same.
Right now, they have invested in third round financing of Baidu.com
and owns a small percentage of its stocks.

The obvious plan for Google would be to purchase Baidu in their
soon-to-be IPOed stock and cash. It will not be cheap.
Baidu now owns 48% of local market shares and is not likely to
go public any time soon ( China is cooling off their economy).
So Baidu will ask for a larger percentage of cash and less stock
(maybe no stock at all), why cash? because stocks flunctuate
and given that Microsoft and Yahoo are both going after Google,
the future of Google is not as bright though it is not dim.
Besides, Chinese prefer cashes.

In fact, it may even be difficult for Google to purchase Baidu.
It might not be for sale. The largest Chinese market share search engine
is at the hand of a foreign company without a Chinese relation.
Not trust worthy. At least not for the media-sensitive Chinese government.

Even it is purchased, Baidu may still go on its own direction rather than following
the path or instruction from its parent company. Other than that, Baidu has yet
need to find a road about China online advertising.

[bill]

We had a thread in here somewhere...I think it was during the whole Google blackout...where the same point about Yahoo being "allowed" while Google was being actively blocked. Some of the points that were brought up then were that Yahoo was allowing the Chinese government access. They were allowing the censors to quietly block sites behind the scenes. A lot of the brouhaha about Google in China was the fact that it allowed access to information that the Chinese government felt was inappropriate. I'm not sure that Jerry Yang's ethnicity was really that much of an issue in the whole matter.

I think the whole issue at stake here is the amount of control that can be exerted over these search engine companies. It's the ability to control what people see that is the main point. There isn't a whole lot of control that can be exerted over Google, and they have been reluctant to accommodate the wishes of the powers in China. I don't think it's really a trust issue. Yahoo simply did what it was told, and was able to operate. Google didn't and the resulting blackout was a bit of muscle flexing on the part of the Chinese.

The situation today is a bit different. Google has been put in its place to a certain degree. The US educated team that started Baidu have been given some pretty hefty support by the government it seems, and the SE market in China has now become more comfortably homogeneous.

So what does Google do now? Well, it has already been investing in the market. It may not be as important for them to be the top SE in China if they can work their way into the market with AdWords and AdSense, which is where they'd make their money anyway.

[asinah]

I think one of the factors is that Yahoo have censors active. A typical example is the Republic of Singapore. From the infos I received from a Yahoo insider was that the Singapore government and police (ISD) have direct access to the servers besides some filters that yahoo installed.

From what I heard the same system that is in place in Singapore is also used in China

[bill]

There was just an article that mentioned some of the points brought up in this thread. Beijing blocks overseas websites, shuts local ones in "war" against porn [story.news.yahoo.com]

It seems that during their campaign to stomp out porn, Google was inaccessible for a week. This only happened this month, so that says something about the position Google holds in China.

The crackdown on Internet porn reflects two top concerns of the Chinese leadership, about the ethical standards of the young and about the subversive potential of the Internet.

With 80 million registered users in China, the government is finding it increasingly difficult to control the Internet, but that has not stopped it from trying.

State media reported last month that the government had suspended the registration of new Internet cafes, following a three-month sweep in which it closed 16,000 existing ones.