Google's quit sets to hit booming Internet market
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Google's loss
It's also a loss for Google to pull out and lose the market share it has gained, market watchers said.
Google is leaving the "fastest growing market," they said. Google is the only major global Internet company that has been increasing its market share in China while most other international players, including eBay and Yahoo!, are being marginalized, said Richard Ji, an analyst at Morgan Stanley.
To date, Google has captured a 32 percent share of the paid search market in China, compared with less than 20 percent three years ago, according to Analysys.
Google China saw its revenue jump 50 to 60 percent annually in 2009 compared with only a 5 percent rise in the United States market, according to Morgan Stanley. At present, Google China contributes only 1 to 2 percent to Google's total revenue. The penetration rate of China's Internet population, which has already exceeded the entire US population, is only 30 percent, compared with 80 percent for most developed countries, implying there's ample upside for the Internet market to expand in China, Ji said.
The majority of Google China's employees won't be affected adversely by the move although some departments face uncertainties, a Google source told Shanghai Daily.
"Divisions like research and media distribution (of Google China) won't see big changes but the advertising sales team may be affected," a Google China staff, who declined to be identified, said during a phone interview yesterday.
Google may move some positions on the Chinese mainland to Hong Kong if necessary, the company said later yesterday.
The Internet titan's decision raised a hot debate among Chinese Netizens and worries from Google's advertising sales agents.
The shut down of Google China would probably hit the business of its advertising agents and their customers, said a letter on the CCTV Website last week, signed by 27 Google China advertising agents.
Google, which operated Google.cn in 2006 with former Microsoft executive and IT industry veteran Kai-Fu Lee, employs about 600 employees now in China. Half of them are engineers and the balance work as advertising sales agents.
Lee, former president of Google China, left the search engine giant last year after Google China was repeatedly criticized by Chinese authorities for providing "pornographic and improper content" in search results.
Other market players and collaborators were cautious about commenting on the issue.
"We don't have plans to stop the partnership with Google at the moment, and we will evaluate whether we should switch partner or use our own search service, iAsk," said Robert Liu, deputy general manager of Sina marketing center.
Google's move is also critical for mobile phone vendors that have adopted the Google-developed mobile system, Android.
Phone vendors Motorola Inc and HTC Corp have gradually transferred to the Android system. Both companies stand to lose market opportunities in the world's biggest cell phone market of more than 700 million users.
"We are concerned about the issue. It may be troublesome if Google really leaves China," Paul Hsu, chief operating officer of Dopod, HTC's domestic brand, said in an interview last month.
