Local Alliances Will Determine Google's China Success - Reuters

| About: Alphabet Inc. (GOOG)

In order to gain market share in China, internet giant Google must learn from the mistakes of peers Yahoo and eBay who failed to understand the Chinese consumer, Reuters says. Instead of forging into China on its own, Google's success will hinge on its abilities to lasso strategic partners with knowledge of and ties in the Chinese marketplace. "Google definitely has made very good strategic decisions, because they selected partners instead of going in by themselves," analyst Edward Yu said. Baidu.com dominates the domestic market due to its familiarity with the landscape, and due to it being less regulated than outsiders. "Google is bound to be more restricted by regulations than a local firm. It probably won't be able to directly import its more sensitive products, such as Google News, and will have to develop domestic services," analyst Liu Bin said. Google already has approval to provide online content in China, but unlike Baidu, none of its content may be produced in-house. Another hurdle is Google's inability to provide search for free music files, one of Chinese search engines' most popular functions, due to international copyright laws, researcher Shaun Rein said. Its China unit also lacks managerial independence. Google entered China in 2005. Since then, it took a stake in social networking site Tianya.cn, downloading service Xunlei, and partnered with portal SINA. In order to avoid China's regulatory hurdles, Google will have to continue making friends in the right places, Yu said.

Sources: Reuters
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