China Doesn't Need Google (or Facebook or YouTube or Twitter.) It Has Its Own

In another sign that America's authority is not what it was in the world, Google is being pushed out of China. The internet giant's hopeful entry to the Chinese market four years ago is set to end in their retreat in the spring of 2010.

The company's commercial success in China, and optimistic view thatcensorship would diminish, is ending in tatters. In fact, Google's time in China, running Google.cn, has simply turned out to be a spur to the development of local Chinese internet services.

The Google-China tug-of-war over censorship prompted the Chinese government not only to dig in its heels, effectively forcing Google out, but also to fend off American internet services in general by encouraging local Chinese versions.

There are over 400 million internet users in China and the government has realised they are active and looking for sophisticated online services. Internet use is increasing rapidly as people use it to find information, get entertainment and express opinions. Revenues from digital advertising, rising fast, are predicted to keep on growing for the foreseeable future.

Facebook, Twitter and YouTube are already blocked and eBay lost out to a Chinese rival. Yahoo, for the moment, is toe-ing the line by following Chinese laws.

But the Google debacle signals a transition in internet services supplied to Chinese users and not the one Google was hoping for. Instead of Google leading the way for more and more US companies to penetrate the market they're being beaten back in favour of domestic Chinese equivalents. China's online population already favours Baidu over Google. They don't need eBay because they have Taobao. It's the same with Facebook which has an equivalent, Renren. QQ is used for instant messaging, online games and social networking. And all these services are very popular. In such a vast market, the earnings potential is huge but the services flag up something else too. China has a strong culture and with its engineering expertise and the oceans of data available from its online population it's highly likely to continue developing its own internet environment and conventions rather than adopting American or other models.

A further sign that this is the Chinese strategy is that the government is tightening the operating rules for foreign internet companies. They have, up until now, been required to run a Chinese subsidiary company or to partner with a local company. New regulations insist on the licensing of domain names and this may extend to foreign sites as well. All of which favours local Chinese business development.

In this context, as Google is rebuffed by the government, advertisers and employees are both getting the message that the future is brighter if they look towards Chinese companies.

Google may have hoped when it broke into the Chinese market that its presence would chip away at undemocratic practice and weaken the repressive government. The outcome seems to be that, for the moment, the government has emerged a little stronger. And Chinese internet companies have received a positive boost.

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