Date
14 November 2018
Google's return to China  will probably have some impact, but the US technology giant is highly unlikely to dominate any part of the domestic market. Photo: Reuters
Google's return to China will probably have some impact, but the US technology giant is highly unlikely to dominate any part of the domestic market. Photo: Reuters

Implications of Google’s return to China

Google is welcome to return to China, the Communist Party mouthpiece People’s Daily wrote in a commentary on Monday.

Intriguingly, the commentary was posted on the newspaper’s Facebook and Twitter accounts, not on homegrown platforms such as WeChat and Weibo.

Beijing appears to be making a friendly gesture to global internet networks, despite the country’s escalating trade conflict with the United States.

In fact, without the trade war, Google’s bid to return to China would have been a lot more difficult.

How would Google’s return affect the internet landscape in China?

I believe that in terms of commercial competition, it would have a limited impact.

Foreign tech giants may have a technological edge, but Chinese players have a deeper understanding of the domestic market.

Take Amazon for example. It set up amazon.cn in China back in 2004. By 2008, it had a 15.4 percent share of the nation’s online shopping market – thanks to its strength in imported goods. But as of last year, its market share has slipped to a 0.6 percent.

Google’s return might affect Chinese search engine Baidu the most. But it is unlikely to change the market structure.

Domestic giants such as Alibaba and Tencent already have established dominance in their respective sectors. Google’s comeback should have negligible impact on them.

If Google returns to China, its search business would only be the starting point.

A censored version of its search engine will provide an opening for the company to bring in its other businesses such as cloud, artificial intelligence, virtual reality, autonomous vehicles, games and entertainment, and other not-so-sensitive services to the country.

Though unlikely to dominate any part of the Chinese market, Google will at least be able to win a slice of a very large market pie. 

This article appeared in the Hong Kong Economic Journal on Aug 8 

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal columnist

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