Google Is Coming Back To China Soon

[beijingwalker]

Google Is Coming Back To China Soon
May 24, 2016 6:24 AM ET
|
Joseph Mwangi

Google is partnering with Chinese Internet company Sohu in search functions.

Google's other services including Google Maps and Google Play could soon follow suit.

Can Google Play enjoy Apple-esque success in China?

When Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google exited the Chinese market in 2010 due to a soured relationship and censorship demands by the Beijing government, it appeared as if it would be at least a decade before the company would even consider making a comeback. But Google has already started making the first tentative steps to re-enter the Middle Kingdomand could be only months away from making a full comeback. Google is set to partner with Chinese Internet company Sohu.com (NASDAQ:SOHU) in Chinese Internet searches. Google will conduct some of Sohu's searches while Sogou, Sohu's search engine, will screen the results. According to the South China Morning Post, other Google applications including Google Maps and Google Play are set to return to the Chinese market. It appears as if Google will share the Sogou search partnership with Microsoft (NASDAQ: MSFT) whose Bing search will be performing English search functions for the search engine.

By the time of its departure in 2010, Google owned about 17% of the Chinese search market. But with Chinese search giants such as Baidu (NASDAQ: BIDU) and Qihoo 360 (NASDAQ: QIHU) now dominating the search space in the country in a big way, Google's most realistic chance of breaking into this market lies in bringing Google Play to China.

Doing it the Apple Way

Few, if any, American tech companies have enjoyed the kind of blowout success that Apple (NASDAQ:AAPL) has had in China. Although the Chinese market was not spared the capitulation after Apple recorded a 26% Y/Y revenue decline in the market during the Q2 FY 16, the largest by any geographical region, it remains Apple's most important market ahead of the entire EU market. Maybe that was to be expected from such a large market that has been growing at close to 100% for several years. In Apple's hardware category only the ''Other Product'' category which bundles Apple Watch, iPods, and Apple TV recorded positive growth after posting a 30% Y/Y revenue increase to $2.2B.

Apple's Software & Service segment, that consists of App Store, Apple Music and iTunes Music, Apple Care Service plans and iCloud storage plans, has however remained a bright spot for the company. During fiscal second quarter, the segment posted revenue of $6B, up 20% from a year ago. Services segment was the only Apple segment that added more than $1B in revenue growth during the quarter. Now much of the success by this segment can be chalked up to App Store which contributes about 30% to the Service category. Although Apple does not routinely divulge App Store revenue numbers, the company said that App Store revenue increased 35% Y/Y while generating 90% more revenue than Google Play up from a 75% lead a year ago according to App Annie. And Apple has China to thank for the explosive iOS revenue growth.

iOS revenue in China grew 2.2x during the last quarter, as China overtook Japan to become the second largest App Store market. China actually overtook the U.S. in App Store downloads during the fourth quarter of 2015. In-app purchases of games is firing all this growth with games such as The Legend of Mir 2, Westward Journey Online, and Fantasy Westward Journey proving to be big hits in China. Although the U.S. still holds a sizable 30% iOS revenue lead over China mainly due to better monetization of non-gaming apps, China is set to overtake it in a matter of several quarters if it maintains that kind of blistering growth clip. The huge iPhone install base in China is certainly helping Apple.

Well, Google's absence in China certainly appears to be part of the reason why Google Play continues to lag App Store revenue-wise despite enjoying the lion's share of downloads. After all Android owns three quarters of the mobile OS market in China with almost everything else belonging to iOS. Google Play recorded an impressive 70% revenue growth in global entertainment revenue during the last quarter, but still failed to match App Store's 130% growth in this pivotal category partly because of its absence in the largest mobile gaming market outside the U.S. India, Vietnam and Pakistan in that order are Google Play's top three markets. All top 10 Google Play markets are emerging economies.

Can Google Play succeed in China? I believe the company has a good opportunity to crack this market. Although smartphone and tablet gaming generated $5.5B in China in 2015, just a sliver of this went to foreign developers due to heavy fragmentation of the Android market in the country with estimates that there are 200-400 independent Android stores operating in the China. Developing apps for such a market can be a nightmare especially for a foreign developer. Not only do developers have to contend with an extremely fragmented market, they often have to surrender more than half their app revenue (estimates run as high as 60% to 70%) to multiple Android channel partners compared to the standard 30% cut by established platforms such as Google Play and App Store. In fact a recent GamesBeat survey of gamers, developer and publishers in China found that most players in the country badly want Google Play to return to the country. Netease, one of China's largest publishers, is one of these. Here is an excerpt from an interview between GamesBeat and a Netease executive:

"[Android is in] a terrible situation. From Netease's perspective, we are happy if Google comes back. It's good for publishers and developers. And the Chinese government probably knows this."

So Google's return will help bring some sense of order to the Android market in China. The presence of Google Play will be a breath of fresh air and will help to open up the market even further. Google Play will easily become the exclusive go-to store for foreign Android developers which means it will have a lot of content that won't be available in smaller Android stores in the country. China might go a long way in helping double Google Play revenue over the next four years:

http://seekingalpha.com/article/3977294-google-coming-back-china-soon

 

[Jlaw]

lol, so who gave in? Chinese government or google?

 

[Beast]

lol, so who gave in? Chinese government or google?

Of cos, Google. They need to censor all rubbish abt China and obey CPC law.

 

[bobsm]

lol, so who gave in? Chinese government or google?

Take a guess.

From last year:

Google Comes Crawling Back to Chinese Market

Times change. Information suggests that Google is now crawling back to the Chinese market with a specialized version of its Google Play Store that fits the censorship requirements of the Chinese government.

https://www.theappdevelopers.com/google-comes-crawling-back-to-chinese-market/

 

[xunzi]

That's what happen when you try to act tough and now force to crawl back.

 

[qwerrty]

too late now. baidu is pretty much owning the whole market just like google in the U.S. and chinese gov gonna make sure it stays that way. lol.. even google allowed to do whatever thay want, i doubt they are any better. google's been in korea and japan for long time now and still just a minor player over there. they way east asian people using the net are not the same like in the west. amazon, ebay, whatapp, msn available in china since the beginning without any restriction when alibaba and wechat were little... look at where are they now in chinese market?

 

[TaiShang]

Coming? Not any time soon. We have heard similar comings how may times. I would say, Jesus' coming is more certain than this one. And potentially more successful.

 

[rott]

Coming? Not any time soon. We have heard similar comings how may times. I would say, Jesus' coming is more certain than this one. And potentially more successful.

 

[ahojunk]

If Google wants to be a major player, it cannot ignore the world's biggest Internet market, China.

My advise to Google - swallow your pride and crawl back quietly into China without making too much noise.

In Rome do as the Romans do. In China, do as the Chinese do, follow their rules.

Hopefully, things will turn out better for Google the second time around.

 

[TaiShang]

More likely a white man CIA agent who know Chinese pretending to be Chinese and then try spread hatre about CPC and China.

The guy sounds like so.

Just ignore that retard as what he has said, guys.

Ignore and report. He will be a goner.

If Google wants to be a major player, it cannot ignore the world's biggest Internet market, China.

My advise to Google - swallow your pride and crawl back quietly into China without making too much noise.

In Rome do as the Romans do. In China, do as the Chinese do, follow their rules.

Hopefully, things will turn out better for Google the second time around.

I would prefer them to be kept out on legal/security grounds. If to be allowed, China needs to demand search algorithms because Google does definitely manipulate search results.

 

[Jlaw]

I'm so happy that under the Indian CEO from Microsoft had make the company going tobankruptcy, now Google is going to be bankruptcy too. These useless Indian CEO, had make the company bankruptcy brightly. Now coming back to China for begging, good to see Indian CEO begging.

I dunno if Google is going bankrupt but having Indian CEO or executive is not usually the right thing to do. Nortel had Indian executive at one time--where is the company now? Faraday Motors will suffer the same fate as Nortel.

 

[rott]

I am sick of this website. I can't even respond to anyone.
@WebMaster

 

[TaiShang]

A white wannabe Chinese?

Most likely so. So many of these sore, loser types who cannot face the reality. Hence, when this kind of news comes up, they will stick out their head and complain.

To be loved too much is counter-intuitive as it draws lots of unwanted people--look at the US now, as they become more of a salad bowl of a country, their political environment is turning violent.

Trump is the last hope for white US. Similar phenomenon in Europe. Of course, they are also paying for the price for their colonialism and imperialism.

 

[rott]

Hehe,you self-righteous old prick,bug off with your sanctimoniousness! I said I refuse to be brain controlled by ccp while being pro independent thought,then you immediately brought up the ethnicity that had nothing to do with what I meant,it's you dickheads who are pathetic honkie wannabes! ain't me!


Your mum must be an "international bus" which everyone can get on,otherwise you wouldn't have been so obssessed with ethnicity,you inferiority complex stricken bytch

Lol, I must have struck a sensitive nerve.

@Hu Songshan @waz

 

[Kyusuibu Honbu]

I dunno if Google is going bankrupt but having Indian CEO or executive is not usually the right thing to do. Nortel had Indian executive at one time--where is the company now? Faraday Motors will suffer the same fate as Nortel.

Very true,
I guess only having a Chinese CEO can save these companies from the same fate, but unfortunately despite Corporate America's recognition Chinese when it comes to the impeccable integrity in regard to IP, we rarely see Chinese CEOs, i guess corporate America is being discriminatory here.