INTERNET: Google’s Slow China Homecoming Marches On

By on

Bottom line: Google’s registration of a company in Shanghai’s Free Trade Zone is the latest incremental move in its crawl back to China, but the company will focus on apps and is unlikely to re-enter the sensitive Chinese search market.

Google searches for China opening in Shanghai

What’s becoming one of the slowest homecomings of all time has just taken another small but significant step forward, with reports that US Internet titan Google (Nasdaq: GOOG) has formally registered a new company in a 2-year-old Free Trade Zone (FTZ) in Shanghai. The move had Chinese media buzzing about an imminent return to China by Google, nearly 6 years after the company shuttered its local search service after a high-profile dispute with Beijing over censorship.

Like many  of the earlier reports, this latest report looks mostly incremental and doesn’t seem to portend any imminent announcements by Google. But the reports do contain a couple of interesting developments that could hint at how the company plans to do business in the world’s largest Internet market if and when it does return. The 2 key new elements are Google’s potential choice of Shanghai for its new China base, and its registration of a new search and email services company to be run under the separate name Pengji.

The choice of Shanghai would mark a move for Google from its former China headquarters in Beijing, and could indicate it intends to try and lower its political profile in its return to the country. The choice of the Pengji name could indicate that Google may try to re-enter the Chinese search market using a separate, new brand that could have distinctly “Chinese characteristics” that would separate it from its older, trusted global Google brand.

The latest reports are all based on the same information, namely that Google has registered a company in Shanghai’s FTZ. (English article; Chinese article) The reports are probably accurate, as they come from a respected Shanghai media that is locally well connected and known for breaking this kind of story.

The reports are just a little confusing, however, as they say that Google registered Pengji in the FTZ a year ago. So it’s a bit unclear if Google has done anything new in the zone recently, or if the registration of Pengji has just now been uncovered by reporters even though it happened a year ago. I suspect the case may be the latter, and it’s worth noting that many other multinationals have registered companies in the FTZ to take advantage of its preferential policies.

Rumors that Google was planning a return to China began to emerge back in June, with reports that the company was making moves to set up a local version of its Google Play app store. Apps from the store could be used on the company’s free Android  operating system (OS), which powers the big majority of smartphones in China. The buzz has grown since then on a number of incremental moves that all point to a China return, though Google itself has remained mum on the issue.

Separate Branded Search?

It does appear that Google registered Pengji a year ago, which was probably part of a broader series of steps the company would need to make before a formal return to the market. If Google did want to re-enter the China search market, use of a separate brand like Pengji might satisfy both Beijing and overseas critics, since it would involve use of a new product that could comply with China’s strict self-censorship standards.

All that said, I’m still not convinced that Google is ready to get back into the China search market, where it would not only have to engage in self-censorship but also compete with entrenched rival Baidu (Nasdaq: BIDU) and up-and-comer Qihoo 360’s (NYSE: QIHU) Haosou. It does seem quite symbolic that Google is potentially choosing Shanghai for its new home, as the zone is quite far from Beijing and also in China’s most liberal area for business and finance.

At the end of the day this latest news mostly seems to reinforce the impression that Google is likely to launch a China app store sometime next year. I would put the chances much lower for Google’s return to the China search market, perhaps less than 30 percent, and suspect the Pengji brand is part of some other China-related initiative that the company is considering.

Related posts:

 

(Visited 158 times, 1 visits today)