When you are dealing with a populations as large as China's, even when you take into consideration that three quarters of the population doesn't have internet access, you are still talking about a very large number of those who do. So it's no surprise that Google, Microsoft and Yahoo! want a piece of this rather large and likely growing pie.
So far at least though, it's not one of the big American search engines making the biggest impact in China. According to an article in this month's Forbes Magazine, it's Chinese search engine called Baidu that's a run-away number one.
Baidu is Local
According to the article, Baidu is a local firm started by a US educated entrepreneur by the name of Robin Li. What Li has been able to do is take control of the search market in China by marketing his search engine as a native tool that understands the language and culture better than any American company could. Li has managed to build a Google-like market share in the neighborhood of 65 percent of Chinese searches. Google has about half that, but according to Forbes is growing rapidly and putting pressure on Baidu. (It's worth noting that this PC world article reports that Google is much less successful than Forbes suggests.)
Treading Dangerously in Foreign Markets
While the Chinese market is tantalizing because of its size and potential for Herculean growth, it is also fraught with political and economic danger. The Chinese government has been known to try and control information now and again, and when that happens, Google (and other American search engines) are caught in a very awkward position trying to operate within the rules and customs of the local market, while not appearing to kowtow or cooperate with what many consider to be oppressive regimes.
In a March, 2009 Business Week article, writer Douglas MacMillan underscored this tension when he wrote:
Big Internet companies that do business abroad often find themselves in a quandary. While at home they champion privacy and free speech rights, overseas they often have to play by rules that don't reflect those same freedoms.
It's not always an easy line to walk and American companies torn between supporting freedom and (as Jackson Browne once wrote) "the struggle for the legal tender" often find themselves in a moral pickle.
Worth the Struggle?
Ultimately for these companies, the prize of huge pay-per-click advertising revenue is worth the struggle. Interestingly, the market graph in the Forbes article shows Yahoo, number 3 but fading fast while Microsoft did not even make it on the chart, which suggests they have little presence, or at least not enough to warrant mention. Meanwhile, Li and his firm struggle with their own alleged ethical lapses (as Forbes reports) while Google continues to increase its Chinese presence and puts pressure on the reigning market champion.
This all goes to prove while it's well worth it for businesses, even small businesses, to expand beyond their local markets, it's not always an easy task even when you have the deep pockets of Google. Just because you're Number 1 in the US doesn't mean much when you crash the shores of a market giant like China. But even a small piece of that advertising market could make it worth the effort, and as you might expect, Google is going after it full bore.