There's a lot at stake for Google (GOOG) in its battle for market share in China. It's not so much the money side of the equation as it is the future. Growth for the huge company must come from the international Internet user; and that's a whole different battle than Google has had to fight in the past.
Their really only competitor in China is Baidu.com (BIDU), the Chinese equivalent of Google the search engine. So far they've trounced Google on their home court.
With China being the world's second largest Internet market, it has a lot of implications if the company fails in a big way here.
T
he major reason is that the rest of the world is watching to see if Baidu, with its localized and nationalized strategy, can hold off Google and grow in its own right. So far it has. If it proves successful over the long haul, many other countries will probably adapt the same strategy and make growth for Google, internationally very difficult.
Part of their strategy is that they've played the nationalists game by targeting Google as the foreign national trying to beat up the home team. So far the Chinese have responded.
But that's only part of the strategy. Baidu also differs from Google in that they allow advertisers to buy placement within the search results, a totally different way of doing business than Google, which doesn't allow that.
Baidu also does a good job of marketing in the country with flashy outdoor displays in conspicuous locations.
So far it's working great for them as 62 percent of Chinese users use Baidu as their search engine of choice, up by 15 points over 2005. On the other hand Google has dropped by 8 points during the same time, to only have a 25 percent share of the market; something the company isn't used to.
Google is fighting back by putting more of a Chinese face on the company by hiring a Chinese sales force and recruiting from China's best technology schools.
They are also looking to partner with other Chinese Internet companies to gain more credibility with the Chinese people.
It's also nibbling away at other much smaller markets like strategies to put Chinese books on the Internet, which caters to the intellectual community in China.
The battle is much more complex and tougher than it is in its usual markets. It seems that the future of Google's growth is in the balance as it attempts to extend to the international internet user. Round one, so far, has gone to Baidu and China.
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