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Last week in China – No Internet and Google Invests in P2P

Due to an earthquake in Taiwan I have experienced again what it was like before the Internet existed. It’s liberating on the one hand, as there’s no need to check my mail every so many hours or keep track of what is written in the blogosphere.

It was also slightly frustrating as I had some domain names that were about to expire and some other business that needed attention. But without a working connection there is not much one can do.

The quake happened on Boxing Day and the Internet in China is still grappling with getting its international connections up to speed. The earthquake showed as well as how interconnected the world has become as how dependent even China is on it. Let’s hope Asia starts investing in more backup cables.

A not-working Internet doesn’t mean that there was no business done. Google has been very active in the last week.

Google invests in video download website Xunlei

Google has invested in Xunlei Network Technology, a Chinese website that offers a peer-to-peer video and software download services (through using tailor-made software) to Internet users. More than 80 million (or 100 million or maybe even 120 million, depending on the source) users have installed Xunlei’s software.

According to a quote from Xunlei co-founder and chief executive Sean Zou they expect to have 700 million users in 2007. I wonder how that will work, as there are only 132 million Internet users in China according to the latest statistics.

It’s not yet clear how the investment will be put to use.

From Reuters

“On the one hand you have downloads and on the other you have search, so you can imagine the possibilities,” Li Kaifu, the president of Google China, told reporters.

Google wants to win back search market share from Baidu, currently the leading search engine in China. Having access to the Xunlei users and integrating search and their toolbar on the website and in the software may be one of the ways they will try to achieve this.

Xunlei is peer-to-peer, as mentioned, which means no hosting of files by Xunlei itself. From the point of possible copyright issues this seems better to handle, contrary to what Youtube is facing. Next to that, the downloading is done in China and IPR enforcement here is still rather light. Season 4 of Nip & Tuck is already available on dvd.

Business week has a nice write up on the popularity in China of the homegrown versions of MySpace and YouTube, if you’re interested to read more about this topic.

Google search on China Mobile Portal

Google will provide their search engine technology to China Mobile’s Monternet WAP portal. The portal offers sports and entertainment news, ringtones, games, images, videos and novels and other content. China Mobile is the world largest Telco with more than 250 million subscribers.

From the Google Press Center:

Wang Jianzhou, chairman of China Mobile, said: “We are delighted to be providing China Mobile users with mobile and Internet search services via our cooperation with Google. Mobile search will help users access the information they need more easily and quickly. This is an important move for China Mobile’s transformation into a mobile information expert. China Mobile will unite the industry chain, rapidly enhancing the whole industry’s value. Our cooperation will not only satisfy our users’ diverse communication needs but also build a new mobile world for Chinese users to communicate freely and live comfortably.

I use this quote as I always enjoy the PR blurb Chinese style. I also hope China Mobile will cut back the time in delivering my sms. The idea is that it gets there before I meet up with someone.

Philipp from Google Blogoscoped ponders whether Google will bring along their infamous censorship module, too. They probably will, but that won’t stop Chinese users to communicate freely.

The last week shows that Google is actively creating partnerships in China to strengthen their foothold. Seeing what happened to Yahoo and eBay that both sold out their businesses to Chinese Internet firms their strategy is smarter. Partnering up on the sideline but keeping their core product, their search engine, in their own hands.

My gut feel says that Google will win back market share in China, maybe not soon but eventually they will. It’s the only prediction for the Chinese Internet market I dare to make.

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Gemme van Hasselt is an Internet Marketing Consultant, living in Shanghai, China.

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