Is Google's return to China a pipe dream or a comeback?

On October 20, American Internet giant Google announced a direct investment in Chinese artificial intelligence startup Yushanzhi. This is Google's first direct investment project in China since it withdrew from China in 2010. The move was interpreted by many media as a sign that Google will return to the Chinese market.

No matter how the media interprets Google's investment behavior, I believe that Google's return to China is a foregone conclusion. The only uncertainty is when Google will choose to return.

As the world's second largest economy, China is so large that no multinational company can ignore it. We can see this from the ambiguous expressions of some other giants towards China: Facebook boss Zuckerberg frequently posts his reading list about China on the Internet, constantly studying China's national conditions and history to prepare for Facebook's future entry into China; Microsoft is no longer obsessed with the serious problem of piracy in the Chinese market, and has lowered its profile to frequently cooperate with Chinese companies, and is even willing to change the default search engine of its browser to Baidu to cater to the usage habits of the Chinese people; what about Apple? As of the end of 2014, the Chinese market has accounted for 22% of Apple's total global sales, becoming the world's second largest market after the United States. While Apple continues to accelerate the pace of opening stores in the Chinese market, it has also included China in the first launch list of its latest generation product, the iPhone 6s. This has never been treated in China before, highlighting the importance Apple attaches to the Chinese market, which Google cannot ignore.

Google's biggest bargaining chip in returning to China is Android

Google's mobile phone system Android has performed well. Globally, in 2014, the global smartphone shipments were 1.3004 billion, of which Google Android smartphone shipments reached 1.0593 billion, accounting for 81.5% of the market share. In the Chinese market alone, in the fourth quarter of 2014, Android smartphone shipments accounted for 86.3% of China's total smartphone shipments, while its biggest competitor, Apple's iOS system, accounted for 12.3% during the same period. Another major benefit for Google is that China is currently the world's largest mobile phone market. The main battlefield in the mobile phone field has shifted from the United States to China. If Google chooses to return to China at this time, it can naturally regain the world's largest lost territory and legitimately establish its own set of ecological chains. The pure bloodline of Google Play Store is definitely more reliable and authoritative than other third-party software application stores in China.

What are the chances of success in stealing Baidu's search engine?

When talking about Google's core business search, let's first take a look at the current situation of China's search market.

Table 1: As of December 2013, Internet user penetration rate, first choice rate, and top two choice rates of major PC search engines

Table 1 is from the "2013 China Search Engine Market Research Report" released by CNNIC. It should be noted that Google Search's withdrawal from China only means withdrawal from mainland China, and it can still be used normally in Hong Kong and Taiwan. From Table 1, we can see that Baidu is currently the only search engine on China's PC, and 360 Search is just eating the leftovers of Baidu. When Google withdrew from the Chinese market, its share of the Chinese search market was about 30%. Now, its market share has become a supporting role.

Table 2: As of December 2013, Internet users’ penetration rate, first choice rate, and top two choice rates of major mobile search engines

Table 2 shows the market structure of China's mobile search engines. It can be seen that it is basically the same as the structure of the PC market. So, if Google returns to China, can it challenge the position of Baidu, the leader in the search field? It is entirely possible. Google's decision to leave China was also helpless. Google has always claimed that it does no evil. Its values ​​​​are in conflict with China's actual national conditions. Google suffered from serious "water and soil incompatibility" syndrome. In addition, its revenue from the Chinese market only accounted for a small part of its overall revenue at the time. Google finally chose to give up. Now it seems that this is a major decision-making mistake. Google has decided to fix this mistake.

A lean camel is bigger than a horse. In the field of search, as the world's largest search engine, Google's global influence far exceeds that of Baidu. It's just that in the Chinese market, Baidu, the local tyrant, is not so easy to deal with. But Google still has a chance! First of all, Google, which started out as a search engine, is much more advanced than Baidu in search technology. What is the key to search? It is experience, and the ultimate determinant of experience is technology, which is the presentation of efficiency and search algorithms; secondly, whoever controls mobile controls the world, and mobile applications are a development trend in the future. In fact, as early as the third quarter of 2014, Baidu's search traffic from mobile terminals exceeded that from PC terminals, and the mobile terminal is dominated by Google's Android system, which basically occupies about 80% of the global market share on mobile phones. Google can fully use this advantage to increase its share in the search field; secondly, Baidu's reputation in the search field can be said to be quite average. The endless advertisements in the search results, bidding rankings and other "evil deeds" have caused many users to complain, and after complaining, you still can't do anything about it, because its Chinese competitors' performance is really not good. Users can be said to suffer from monopoly, and the arrival of Google provides a better choice. I believe that technology geeks and rational users are happy to choose Google. Perhaps Google's bigger problem is how to change the search engine usage habits that have already been formed by the vast majority of ordinary users in China.

Internet of Things, Google's new frontier

As a global hotspot, the Internet of Things has been developing rapidly in recent years, especially in my country. The comprehensive growth rate in recent years has reached more than 30%, and the overall scale in 2015 is expected to reach more than 750 billion yuan. Not only will Google not take it lightly, its rivals such as Apple and Samsung are also coveting the Chinese market. In fact, Google has already started its layout in the field of Internet of Things. At the beginning of last year, Google acquired the smart home company Nest for US$3.2 billion, and in May this year, it launched the Internet of Things operating system Brillo. Brillo is an Android-based operating system, which means that the Brillo system can easily achieve seamless connection with Android phones that occupy about 80% of the global market share. This is what gives Google a great advantage in competing with many rivals in this field.

Data source: CCID think tank, March 2015

Although the status of mobile phones in the field of Internet of Things and smart home is increasingly questioned, at least for now, there is no doubt that mobile phones have an important strategic position. Google relies on its advantages in the field of smart phones, combined with the good compatibility of the Internet of Things operating system it has developed and the mobile phone system, to build a powerful Internet of Things or smart home ecosystem is easy, which is also what its competitors are most afraid of Google.

Android Pay, another fertile land to be cultivated

According to the latest news, Apple Pay, Google's old rival, has secured the approval of the four major domestic banks and will most likely be launched on February 8, 2016. Although Alipay and WeChat Pay have already occupied the vast majority of the market share in China's current mobile payment field, the industry is generally optimistic about the prospects of Apple Pay in China, believing that the high price of Apple phones themselves determines that most of its users are high-income people, the so-called high-net-worth individuals. If Android Pay enters China, the long-tail demand generated by its larger Android phone user base cannot be ignored. With the accumulation of small streams to form a big river, it is not difficult for Android Pay to occupy a place in China.

Although Google's core area is search, and Google has unique search technology, which makes its search quality and efficiency lead the industry, the Android mobile operating system (including mobile phones, tablets, etc.) will become an increasingly important strategic bargaining chip for Google. It is this strategic bargaining chip that enables Google to be at ease in many fields such as mobile phones, the Internet of Things, smart homes, and mobile payments. Perhaps in Larry Page's heart, Android and search business have long been equated!

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.