(Photo: Simon Steinberger)
Google is reportedly seeking ways to re-enter the Chinese market which it bowed-out from in 2010 over censorship concerns.
The world's most popular search engine has reportedly reached out to Tencent, Inspur Group, and other Chinese companies to pitch its cloud services. Tencent is a multinational investment holding conglomerate while Inspur Group is a multinational information technology company.
Chinese regulators have banned many Google products. Re-entering the market will not be an easy feat for the company, but the Chinese market is also something that will be hard to turn away from. The country has approximately 772 million internet users in China, and more than half a billion of its people are on mobile.
Google had reportedly discussed with several Chinese companies early in 2018 but has narrowed down its selections to Tencent, Inspur Group, and another yet to be identified company according to sources who spoke with Bloomberg. If Google strikes a deal with any of these three companies, particularly either with Tencent or Inspur, the company is expected to make a strong comeback in the country.
Once Google re-establishes its presence in China, it will no longer be hard for the company to compete with Amazon and Microsoft regarding revenue. On the other hand, Google will face stiff competition with one of the major local cloud service providers, Alibaba. John Dinsdale, an analyst at Synergy Research Group, said local companies dominate the cloud industry in China, making it a hard market to penetrate among outsiders, including Google.
When Google left China in 2010, it continues to sell display advertisements in the country. The company, however, has not seen any major clients for its display ads business in the country, according to CNBC. Google is fourth behind Tencent, Alibaba, and Baidu regarding advertising revenue, according to James Lee of Mizuho Securities.
Analysts also see a slim chance for Google to be successful in its plan of introducing a version of a censored search engine in China. Baidu, which overthrows the company before its exit in 2010, currently has 73.8 market shares in China.
Between introducing a cloud service and a censored search app, analysts believe the former will be the safer choice for Google to not find itself in conflict with the Chinese government's strict regulations.
Google's planned comeback to China is happening amid the mounting U.S.-China trade war, and this is another hurdle that the company will face regardless of its next step for its planned comeback in China.
