After negotiating the ‘great firewall of China’, the internet’s star brand got lost in translation
By Janet Ong and John Liu
Thursday December 20 2007
Google, the owner of the world's most-popular internet search engine, is struggling to turn its brandname into a verb in China. "G-O-O-G-L-E is not a normal Chinese spelling and people don't pronounce it right," Kai-fu Lee, Google's president for Greater China, said in an interview in Beijing. "Most people call us 'go go'." California-based Google, is so well-known in most countries that the Oxford English Dictionary lists its name as a verb. But it has less than half of Baidu.com's 61pc market share in China.
Lee, recruited from Microsoft in 2005 to expand Google in China, said he would try new advertising strategies to overcome the language barrier. He declined to provide more information. "Very few people know Google and what they stand for" in China, said Charley Kan, managing director of Mediaedge:cia, a unit of WPP Group, the world's second-largest advertising company. "Compared to Baidu, it is in a weak position."
OvertakingChina, the world's second-largest Internet market with 162 million users, may overtake the US in three to five years, according to Oppenheimer & Co analyst Sandeep Aggarwal in San Francisco. Online advertising, the source of 99pc of Google's revenue, may quadruple to 20 billion yuan (€1.8bn) in China in the four years ending 2010, according to Beijing-based Analysis International. Google generated 250 million yuan in search revenue in China last year, Credit Suisse Group estimated in June. That's less than 1pc of the company's total for 2006. Google doesn't disclose sales in individual countries.
Internet addresses in China are based on the Hanyu Pinyin system that translates Chinese characters into roman letters. Sounds such as "gle" don't exist. "That's a big problem for us," Lee said. Google last year acquired the "G.cn" domain so users who misspell the company's name still get directed to its Chinese- language Web site "Guge," or "harvesting song." The adoption of that name in 2006 prompted criticism that it was a song about something going downhill because "gu" also means valley. "It's a name that would appear to have been picked by someone who doesn't know Chinese," said Liu Bin, an analyst at Beijing-based researcher BDA China Ltd. "It hasn't helped their marketing."
Yahoo!, owner of the world's most visited website, is also struggling. Its market share in China slipped to 10pc in the third quarter, from 13pc a year earlier, Analysis said. Yahoo owns 39pc of Alibaba.com, which took control of the US company's China unit in 2005. "We set our sights on the leader. Google is still doing what Google does, but it is not our focus," said Porter Erisman, an Alibaba spokesman in Beijing.
"Our main concern is building a long-term sustainable business," said Mr Erisman. Baidu, meaning "hundreds of times," widened its market- share lead to 61pc from 57pc after offering bulletin boards and an encyclopedia service, according to Analysis estimates. Google's share rose to 24pc from 16pc.
Baidu.comBeijing-based Baidu's shares have surged 15-fold since their August 2005 initial public offering, valuing the company at about 100 times projected 2008 earnings, estimates compiled by Bloomberg show. Google's stock more than doubled over the same period and trades at 35 times estimated profit. Yahoo trades at a multiple of 48.
"Baidu is a very good company that has been able to meet the needs of the Chinese advertiser and user more effectively than Google," said Walter Price, who owns Baidu and Google shares as part of the $120bn portfolio that he helps steward at RCM Capital Management in San Francisco. Google failed to close the gap with Baidu after providing Web searches for mobile phones and online maps, and buying minority stakes in China's Tianya Internet Technology and Shenzhen Xunlei Network Technology to offer social-networking services.
Lee also faces the challenge of expanding in a country where the government bans criticism of the state. Google's China service already excludes some information censored by the government, such as any material about the 1989 Tiananmen Square protests, and the subsequent massacre of hundreds of civilians. Yahoo Chief Executive Officer Jerry Yang last month apologised to the mother of Chinese dissident Shi Tao, who was arrested in 2002 after the company gave his e-mail records to Chinese officials.
The arrest prompted the US Foreign Affairs Committee in October to approve a law that outlaws aiding countries in limiting Internet access to restrict human rights. "Google definitely doesn't want the same thing to happen to them that happened to Yahoo," according to Elinor Leung, an analyst at CLSA in Hong Kong.
Faced with such challenges, Google has increased the number of engineers in the Greater China region to 200, its biggest research and development team outside the US, by offering higher salaries and perks such as free massages. The company will begin "some experimentation" for advertising in the next 30 days, Lee said.
"In China, we need to do more. If people don't know Google is a search engine, or if they can't spell Google, they don't know you are better." (Bloomberg)
- Janet Ong and John Liu
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