How Google Can Win Big If It Goes Big In China

Thu, 08/23/2018 - 11:32

Google is reportedly in the process of re-entering the Chinese market. The American tech giant has been developing a search engine for China and it has led to speculation over how a Google re-entry, and its fight with local rivals, might play out.

Google Entering China

Google has a worldwide dominance, leading the search engine market wherever it is available (with a few notable exceptions). However, before it had to leave China, Google had to fight homegrown player Baidu for market share. Google held roughly 30% of the China search market, with Baidu taking most of the rest, in 2010, before it had to shutter its operation due to censorship and cyberattacks.

Chinese Internet users seem keen on Google's return, with an online poll returning a response of 86% who would prefer using Google over Baidu. Similarly to Baidu, Google will have to run a search engine compliant with strict censorship laws in order to operate in China. According to The Intercept, Google has been developing this search engine since at least last year. Baidu's shares dropped nearly 8% on Nasdaq following the news.

Search Engine Market Share in China

Baidu's popularity stemmed not from a superior search engine but in part by using tactics that Google didn't follow such as allowing users to easily access and download unlicensed MP3s. Yes Baidu's popularity among users has waned, with users often critical of the site's ranking quality. These include repetitive results, low quality ads, and a plethora of ads that are actually scams.

Meituan, which started as a Yelp-like site, has a deeper listing of local businesses. Josh Horwitz reported that when trying to find VR cafes in China he couldn't find any locations in Baidu but searching on Meituan returned dozens of addresses for VR cafes.

Another reason why Baidu is not so dominant is because of the ubiquity of WeChat, the super-app owned by Tencent, and where increasingly a large amount of text-based content is found, making up an Internet of its own. This content, inside Tencent's walled-garden WeChat, cannot be easily accessed or found via Baidu.

Tencent, in fact, seems to provide a smoother way in for Google, and the two Internet giants are becoming ever more closer partners. In January Alphabet (Google's parent company) and Tencent announced a patent cross-licensing deal and to share a "broad range of products and technologies". In the same month Google opened an office in Shenzhen, the southern Chinese metropolis, which is home to Tencent's HQ.

The summer months were busy for Google in China, opening with June's announcement that Google was to make a $550 million investment in, China's second largest online retailer, in which Tencent also has a significant stake. The investment was widely seen as a deeply strategic move that could help expand internationally while Google needs to remain competitive in cloud computing and e-commerce to keep up with rivals like Amazon.

Google WeChat Mini Game

July saw Google launching a WeChat Mini Program, a sketching game. WeChat Mini Programs are lightweight programs that act as apps inside WeChat. It was intriguing that it was a game, perhaps Google is interested in helping Tencent's position as the world's largest games company.

According to The Information, Google is also developing a news app for China. China's most popular news app is Jinri Toutiao, whose owner Bytedance, a Chinese super-unicorn, has been publicly quarreling with Tencent. The popularity of Toutiao is down to Bytedance's expertise in algorithms and its content recommendation engine that tailors articles to the individual user. But Google's strengths in this area are well known, and if a partnership between Tencent and Google comes to fruition in a news Mini Program on WeChat then Tencent could potentially upend Bytedance.

Google's AI and algorithmic prowess could aid search within Tencent's WeChat while Google will have access to Tencent's superb ability in building social platforms, something Google has long struggled with. The outward expansion of WeChat and Tencent's longterm globalization strategy could also benefit from Google's global expertise.


Why Google could take a large chunk of the Chinese search market, and even beat Baidu


1) Google is a better all-around search engine!

As somebody that has used Google and Baidu a lot, Google just returns better results. Especially for complex search phrases. From running many SEO campaigns in China and the west, I know that Google is much better at returning quality content to users than Baidu is. Still, this reason isn't enough on its own. Baidu said they will "fight again, win again". But the situation is different now.


2) Chinese Internet users have changed

In the time of Google and Baidu's last fight, Chinese Internet users were a lot newer, more naive, they used Baidu because it was what they knew and it put itself out there a lot more than Google did. But Chinese Internet users have only become increasingly sophisticated over time. They're willing to try new things, willing to switch brands.


3) Baidu's brand is damaged by scandals

The death of a college student in 2016 due to unreliable medical treatment he found via a Baidu ad was a huge scandal for the Chinese company, and it still struggles with scam ads. Google could definitely have the upper hand on this front.


4) Google can find partners

Such as the aforementioned Tencent, and Alibaba, China's other major Internet giant. Both have search partners but are relatively weak still. Although Google seems to have declared its intent with Tencent, it would be wise for Google not to completely neglect Alibaba whose operations are so successful in China from e-payments to e-commerce to synergies with Google in chip-making and AWS (cloud services).


5) It's an unstable political climate now

It might actually be a good time for Google to re-enter. This would give the Chinese government a chance to show that it is still very willing to allow Western businesses to participate in China, so long as they follow Chinese law.


Here are some things against Google


  1. Google has historically not been great at advertising. I think that if they go to China, they should go in with a bang. The whole big brand treatment, outdoor advertising included. This is a problem that we very often see with Western companies - they're just so timid in the face of Chinese competition, they end up looking weak. They can come in as the better, smarter, more-reliable search engine. The white knight to save Chinese Internet users from Baidu. In my view, this is basically the only major obstacle. However, Google may be just as hamstrung as it was before in the realm of politics.
  2. Baidu has a handful of related services that are strong - maps, Baike, Tieba, etc.
  3. Google also faces competition not only from Baidu, but also from 360, Sogou (integrated with WeChat) and Shenma.
  4. Google Play is not much use in China yet, or maybe that will become unblocked as well.


How will it affect marketing in China?


I hope that Google will offer a much more efficient experience than Baidu does. But, to be honest, it's under government scrutiny, so we can probably expect long waits and lots of paperwork from Google as well as Baidu. With that in mind, we can assume that Google will offer an advertising solution similar to Baidu. This will not affect advertisers much, they'll just have one more search engine to work with.

It might affect content marketing in a huge way. Imagine if Chinese websites/brands/businesses start treating content marketing like Western brands do. There will be an explosion of great high-quality content on the open Chinese Internet. 'Open' means not just within walled gardens like WeChat. This is the part that I'm excited about.




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