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Sherman So

Search engine confident of a rebound with launch of new services in China

Google Greater China, a unit of the world's leading search engine, put on a fighting front after a survey last month showed that it was losing market share in mainland.

Google's market share in leading cities such as Beijing, Shanghai and Guangzhou dropped to 20.6 per cent  last month from 32.9 per cent a year earlier, according to the survey by  mainland market research firm China Intelli Consulting  released last week.

'A temporary fluctuation in market share does not worry us,' said Professor Lee Kai-fu, a co-president of Google Greater China.

'Google is coming to China for the long term. I believe in the next six to 12 months, our market share will  pick up again as new services start to launch in our China site, Google.cn.'

Google China  offers about 13 services involving mostly basic searches for websites, pictures, news and similar topics, plus some products such as China map search, a useful tool for city visitors.

'We started our local offices last year. Some of our staff  joined us only in July. It will take them some time, usually five to six months, to come up with new products,' Mr Lee said. 'But  from early next year, you will see new services launching on a regular basis.

'Online community, entertainment, sports, you name it. I will say 'Yes' to all of those, if you ask me.'

The new products will be needed to make inroads into the market lead held by Baidu which is churning out new products  regularly. The latest of its 31 options,  Baidu Space launched in July, allows users to create personalised homepages on Baidu and integrate their use of other Baidu search products in one place.

These and others, including a Baidu law search and Baidu kids, helped the company increase its market share to 64.5 per cent from 51.5 per cent a year earlier.

Many users are still attracted to Baidu's MP3 search facility, useful  in hunting  for pirated songs. Even so, 72.6 per cent of Baidu users  visit the  website for regular searches, the survey found, compared with 49.1 per cent a year earlier. That comes close to the 76.9 per cent figure for Google.

The strong showing for regular use boosts Baidu's credibility with advertisers.

'Baidu absolutely has advertising value,' T.R. Harrington, a director of Shanghai search marketing firm Darwin Marketing. 'We are using it to promote a number of high-value products.'

Darwin, which has been using Baidu, Google China and Yahoo China for campaigns, plans to spend more than US$1 million on China search engines over the next year on behalf of its clients.

That vote of confidence in Baidu means Google will have to fight hard to keep high-end users its most successful sector. Its market share of high-spending Beijing residents aged 25 or more  with a bachelor degree or better and earning 3,000 yuan per month or more, is 43.7 per cent - a neck and neck race with Baidu's 45.1 per cent, according to the Intelli survey.

Google China is working on improving its general Chinese search capability - to  erase the general impression that  Baidu is better when it comes to China-related search.

'We are trying to produce faster, broader and more relevant and more updated search results, at the same time avoiding spam,' Mr Lee said.

The fundamental need at the moment is to hire good people, he said. 'Once we have good people, they will develop better products and then the market share will pick up and so will our revenue and profit,' he said.

The company may also have to alter its fundamental business model.

'Google built a business in the US that did not require much investment in brand advertising or reliance on agency partnerships for sales growth,' said Mr Harrington. 'But China is not like the US market. In smaller and less affluent cities, Google is almost completely unknown.

'There is room for Google to be more aggressive promoting its brand and working with agencies.'

Mr Lee did not rule out the possibility the  firm will use mass media to advertise Google in China. 'However, we need to find a way to target the right audience,' he said.

Google is also  boosting its affiliate network of third-party websites that  carry Google's advertisements  in return for a share of revenue.

'More traffic comes from our [affiliate] network than our own Google site in China,' Mr Lee said. 'Some of the most popular websites,  such as NetEase, also partner  us and direct their traffic to our search engine.'

The strongest alliance  is yet to come. Google China is talking with China Mobile for mobile search, according to the mobile operator's  chief executive, Wang Jianzho.

This could be a key alliance, given that Mr Lee believes that in the next few years the mobile phone will be a major channel for people in China to go online.

'In the next few years, many people in China will use mobile phones to connect to the internet.'

It is a prospect to relish. China has 120 million internet users, many restricted to offices and schools. In comparison, more than 400 million people in the country have their own mobile phones. It is a market worth searching for.



Google shrugs off market share drop