Google gets licence for mainland division

PUBLISHED : Saturday, 21 July, 2007, 12:00am
UPDATED : Saturday, 21 July, 2007, 12:00am
 

Google, the world's most popular internet search engine, has obtained a licence for its internet operation in the mainland.


Beijing on Thursday granted an internet content provider (ICP) licence to a joint venture equally owned by Google and Beijing Feixiangren Technology, said Marsha Wang, a spokeswoman for Google.


The venture will be responsible for the operation of Google's mainland website, Ms Wang said.


'The internet content provider licence is important, as it gives Google official status in running an internet business in China,' said Jacky Huang, an analyst at IDC.


Google has for about a year been using the ICP licence of Ganji.com, a website that belongs to Beijing Feixiangren Technology.


'Google China was running its [mainland] operation in a grey area,' Mr Huang said. 'Now, with a proper ICP licence, Google's China operation will not risk being shut down by the government. Its servers can officially run in [the mainland].'


The government does not give ICP licences to foreign-controlled companies. US rivals Yahoo! and Microsoft have both injected their mainland internet operations into ventures with local companies.


'It means Google has fully integrated its operation in China,' said Dick Wei, a mainland internet analyst at JP Morgan. 'But Google's major problem ... is not the ICP licence but its sales and marketing. It still faces a steep learning curve in building its channel.'


Google use 15 local agents for its mainland advertising sales. It gives 3 per cent to 5 per cent of gross revenue as commission to its agents, compared with up to 30 per cent given by its mainland-based rival Baidu.com.


'Baidu just matches the industry norm. Other internet companies such as Sina and Sohu.com pay a similar amount,' said T.R. Harrington, managing director of Shanghai-based Darwin Marketing. 'Google is the only one that is different.'


Baidu had 57 per cent of the mainland search market in the first quarter, against 19 per cent for Google, according to Analysys International.


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