Weibo: Google's Schmidt eyes China gadget market
The microblogging realm has been buzzing these past few days with speculation on a brief China visit late last week by Google (Nasdaq: GOOG) Chairman Eric Schmidt, who checked out counterfeit goods at a gadget market in Beijing's Zhongguancun high-tech area. Equally interesting was the inclusion in Schmidt's group of two former Google executives who now work for Xioami, the fast-rising smartphone maker that hopes to someday become China's equivalent of Apple (Nasdaq: AAPL).
The presence in Schmidt's entourage of former Google executives Lin Bin and Hugo Barra must certainly have some people speculating about potential future collaboration between the two companies. Lin was one of Google's former top engineers in China, and later left to co-found Xiaomi. Barra arrived at Xiaomi more recently, after making a high-profile defection from Google in September. Schmidt's interest in China-made gadgets, specifically local knock-offs of famous western brands, also had some people speculating that perhaps Google could be contemplating a roll out for its Nexus-brand smartphones or even its state-of-the-art Google Glass glasses-style device in China.
Lin Bin was quick to point out the strong relationship between Xiaomi and Google on his microblog on Sina's Weibo service, often called the Twitter of China. He waxed lyrical on how Google's Android free operating system (OS) powers most of Xiaomi's devices, including its smartphones and new smart TV product. Not surprisingly there was no mention of recent rumors that Xiaomi is developing its own smartphone OS.
Meantime, Sina's own technology microblog detailed Schmidt's trip and even contained a photo from Zhongguancun, saying the Google chairman wanted to know more about China's mobile device market. In particular, it said, Schmidt was interested in knowing about mobile devices, and also knock-off products that are powered by Android. A Sina technology writer named Meng Hong, who also witnessed the Zhongguancun visit, said rumor had it that Schmidt might be looking for potential places to sell Google Glass.
Schmidt seems to be quickly developing a deep interest in China, as this is his second visit to Beijing this year. He made another brief stop in the Chinese capital back in January, following a personal visit to the reclusive North Korea. This time he traveled first to South Korea, North Korea's archrival, before arriving in Beijing and touring Zhongguancun on Friday. His recent interest comes three years after Google's high-profile spat with Beijing in 2010 over self-censorship policies, which ended with Google's decision to shutter its China-based search service.
Since then much has changed, including the rapid rise of the China smartphone market, which will pass the US this year to become the world's largest. The big majority of cheap smartphones in the market are powered by Android and manufactured by the likes of homegrown players like Xiaomi, as well as Huawei, ZTE (0763.HK; Shenzhen 000063), Lenovo (0992.HK) and Coolpad.
Against all that backdrop, a launch of Google's Nexus smartphones in China, or a partnership with Xioami, certainly wouldn't come as a huge surprise. Google has made a big push lately into hardware, first with its smartphones and then its smart glasses. Such products are far less controversial than online search, and thus are far less likely to lead to conflicts with Beijing. What's more, Beijing also prefers that big foreign companies invest in China through partnerships with local partners like Xiaomi.
All that said, it will be interesting to see what Google's next major move in China is. A partnership with Xioami certainly seems possible, especially considering the strong personal ties between the two companies. I could also see Google launch its Nexus phones in China over the next year, though it could face an uphill march due to stiff competition from all the local players, as well as from global powerhouses Apple and Samsung (Seoul: 005930). Whatever happens, the one thing that does seem clear is that China is back on Google's radar screen, and a new push into the market seems likely in the next year.
To read more commentaries from Doug Young, visit youngchinabiz.com