Google Increases Stake in China

Google Inc. reportedly plans to acquire one or two Chinese companies and invest in up to five more over the next year as part of efforts to gain ground on rival Baidu.com Inc. in China.

"Over the next year, Google will acquire one or two companies in China, and invest in four to five companies," said Kai-Fu Lee, president of Google China, quoted in a report (in Chinese) carried on several Web sites. The report did not say what companies or technologies Google is interested in.

A Google China spokeswoman did not immediately respond to phone and e-mail messages seeking confirmation of Lee's reported comments.

Unlike the U.S. where Google dominates the Internet search market, the company trails behind market leader Baidu.com in China. But Google executives insist they will eventually overtake their Chinese rival, saying the company's offerings in China are competitive.

"It's a very good start and although we don't think that this will result in an immediate huge success, we think that the tenacity of Google ... will bring significant victories in China over the next few years," Eric Schmidt, Google's chairman and CEO, told analysts during a conference call last month.

Investments and partnerships with major Chinese players will likely play an important role if Google realizes its ambition of being the top search company in China, and the company has taken several steps in this direction.

In January, Google took an unspecified stake in Xunlei Networking Technology Co. Ltd., a popular Chinese peer-to-peer file sharing Web site. The company also has a mobile search deal with China Mobile Communications Corp., the country's largest mobile operator, and recently struck a search and advertising partnership with Sina Corp., which runs China's most popular Web portal.

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