Google slaps down China resellers in 'very important market'

When piece of action comes at a price


Google has reportedly cut ties with seven ad resellers in China and, at the same time, renewed its vows to search users in that region – despite their undying love for the firm's rival Baidu.

Mountain View came under fire from Beijing officials earlier this year, after it provided China-based surfers with a search redirect via its Hong Kong servers.

The company’s defiance quickly came unstuck, however, and it was forced to do an embarrassing U-turn or else face being frozen out of the all-important China market.

But Google appears to be hedging its bets, with Reuters reporting this morning that it has turned its back on seven big name resellers in the country.

The firms had punted AdWords worth around 1.5bn yaun ($226m), or 40 per cent of Google’s gross sales in China last year, according to a Credit Suisse note.

Despite that, the web kingpin has ditched the resellers and is on the look out for other companies in China to step forward and flog its AdWords service.

However, a Google spokeswoman didn’t explain to Reuters why the Eric Schmidt-run company had dropped the resellers.

"[A] letter was sent out to them on 27 September... We gave them a month's notice," said Google.cn’s Cindy Qin.

All of which could open the door for China’s biggest search engine Baidu to snap up even more market share*. It currently holds about 70 per cent of the business in that region.

Meanwhile, Google veep John Liu told a tech conference in Beijing that China remained a “very important market” for the company, reports AFP.

He said the world’s largest ad broker would “continue to provide the best products and services for users in China as in other markets”.

Specifically, Google is hoping to tap into digital marketing to get more of the 30-40 million SMBs in China to sell their products online.

"Google, together with our team and partners, will spare no effort in helping China users and companies in digital marketing," said Liu.

But to really achieve that, Schmidt and co might want to turn their attention to that vanishing market share first. ®

*Microsoft's Bing heart barely beats in China. The company is trying to up its search prowess in the country having recently launched a beta with e-commerce giant Alibaba in that region.

"China is now the No. 2 market in the world, and will be the No. 1 market within the next year or two, for smartphones, PCs, etc. And I think it’s really important," noted MS boss Steve Ballmer on his visit to London recently.

In other words, all the tech titans want a bigger slice of the pie.


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