Internet search giant Google is likely to establish a mainland presence after completing its US$2.71 billion initial public offering, in an effort to convert its popularity in China into advertising revenue. The firm commands 30 per cent of all mainland search inquiries, lagging the 48 per cent processed by Baidu.com, according to data from Shanghai-based iResearch. It derived just US$1.2 million in revenue from the mainland last year, primarily by providing search engine technology to portal Sina.com. Advertising - which accounted for 95 per cent of the company's US$961.87 million in revenue last year - contributed nothing from the mainland. 'You need to monetise the traffic but how can you do it?' DBS Vickers analyst Wallace Cheung asked. An investment banker who met executives of the company said Google had a 'historical bias' towards organic growth and would probably set up its own mainland offices, to gain local experience, before buying a Chinese competitor. 'I think post-IPO, they'll probably grow out here more aggressively,' said the banker, who asked not to be identified. 'I don't think they're going to acquire immediately to get into the market.' Building a global presence will be one focus of the company following its IPO. In the company prospectus filed last week, Google said it would use part of the proceeds to make acquisitions, including those of overseas businesses. International sales account for just 26 per cent of Google's revenue, yet more than half its user traffic comes from outside the United States. In China, foreign and domestic companies such as Baidu and Zhongsou.com are eyeing a search market forecast to grow to a value of US$277 million by 2006 from $62 million last year. In November last year, Yahoo! bought 3721, which allows users to search for information using Chinese key words. The mainland has 68.34 million web surfers. They are expected to number 141.75 million by 2007. Although foreign players such as eBay and Yahoo! have acquired rather than built mainland businesses, Google would not necessarily need to take the same route. 'Google doesn't really need to partner with anyone or re-brand itself because people are well familiar with it,' iResearch analyst Yang Bo said. What is remarkable is that Google has built name recognition on the mainland - iResearch estimates that 70 per cent of Chinese web surfers have used it, even though it lacks a China site. Visitors to www. google.com.cn are re-directed to a Chinese-language imitator calling itself Go Ogle. Simon So, a consultant at PricewaterhouseCoopers, prefers Google to Baidu because the US site has greater coverage of Chinese-language web pages. 'Google will be the first choice for me,' he said. At Google's US site, Mr So can look up information in traditional and simplified Chinese characters. The company's Japanese office is its only presence in Asia, although it is taking steps to boost sales in the region. In February, Google unveiled Chinese-character support for its AdWords service, which links advertisements to keyword searches. Mainland rivals, however, would prefer that Google stay at home. Baidu had an estimated US$12 million in search engine sales last year, accounting for 20 per cent of the market by revenue, while 3721 had $24 million, a 40 per cent share. 'The lack of presence in China gives room to domestic search engines,' Mr Yang said. A move into China would not be without obstacles, as Google is well aware. In its regulatory filing, the company said language and cultural differences and legal and regulatory restrictions could hinder its efforts overseas. It is believed that in 2002, the central government blocked access to Google for about two weeks over concerns about the spread of information it did not like. Mr Cheung said it was possible the government could support mainland search engines. 'At the end of the day, China wants its own companies to have a dominant position.'