March 22, 2010 7:29 am

Google set to announce China site closure

Google could reveal as early as Monday the closure of its Chinese search engine and its plan for the rest of its China operations, according to a person familiar with the situation.

The US internet giant said on January 12 it was no longer willing to censor its Chinese search engine and could pull out of the country unless a solution was found. Since then, Google employees, advertisers and the millions in China who use its services have been waiting to find out how far the company’s retreat from the country will go.

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Google could terminate all business activities in China. This would include closing down both its joint venture running Google.cn and its wholly-owned research subsidiary. More than 300 engineers and another 300 local sales staff in Beijing and Guangzhou would lose their jobs.

Without their support, the company’s ability to offer Chinese services on its main google.com website could suffer and and its share of the search advertising market would dwindle in China.

A complete pull-out by Google would indicate a failure to reach even a basic compromise with the Chinese government. This could result in a political stand-off, heightening the risk that Beijing could block or disrupt access to google.com within China.

The fate of other Google-linked businesses such as the sale of handsets using the company’s Android platform could also be threatened.

However, global handset makers and Chinese telecoms companies have repeatedly said they expected Android devices to continue to do well in China.

A different scenario could see Google maintain a sizeable presence in China. The company could keep its research staff in the country and continue to build search features suited to Chinese internet users.

Users could access the Chinese-language interface of Google.com through the English-language site and changing the language setting, said Cao Junbo, chief analyst at iResearch in Beijing. “But [Google] could tweak this in a way that every user with a China-based internet protocol would automatically get the Chinese-language interface.”

“They would then move all the service offerings for the Chinese market on to google.com so for Chinese users many things would still be available,” Mr Cao said.

However, this scenario, which might allow Google to hold on to part of its 35 per cent market share in China, could only work out if access to google.com remained unobstructed.

“The bad thing has been the uncertainty since January,” said Steven Chang, the Greater China chief executive of ZenithOptimedia, a media services group. “Since January, we have been offering clients advertising on other search engines in China as a back-up plan. But many continue to go for Google because a large majority of digital advertising is very short-term.”

So far, most Google staff in China have stayed with the company and attempts to poach them have been largely unsuccessful.

A headhunter who had been trying to interest engineers for jobs at IBM’s cloud computing unit said nobody at Google China wanted to move. A human resources consultant working for Microsoft said offers for jobs at Bing had also generated very little interest among Google China staff. She added that the internet company’s employees were still betting that they could keep their jobs. “And if not, they’ll be waiting for fat severance packages,” she said.

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