Google Looking to Expand Chinese Opportunities

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After an unceremonious exit from China in 2010, Google looks to expand its opportunities with a new Play mobile-app store. The plans remain tentative until it can complete a few steps to appease the Chinese government, leaving the possibility uncertain.

According to a Google Asia representative, China is an active market for Android apps but the lack of a centralized presence makes it difficult to distribute them. Moving an app store into China offers developers an efficient means to distribute their games and apps.

Google left China in 2010 due to cyber-attacks on Gmail users and government censorship of search results. Without its influence, China is virtually a Wild West market of android apps with several providers and many dangers to intellectual property rights. Developers hire teams of experts to manage connections with the multiple stores and they must remain vigilant of any copyright or patent violations.

Developers based in China can only earn money on Google Play apps through one of the third-party providers. If they wish to deal with that platform directly, they require an account registered overseas to access the services that are blocked on the mainland. The Chinese version of the Play Store will likely offer order to the chaos of the Chinese app scene.

In the U.S., there are two dominant app stores, including the Play Store, making it an efficient market for app developers to track their products and sell them to consumers. Google looks to create the same situation for China and its developers by expanding this opportunity to them while producing more profit for itself.

China is the largest smart phone market in the world, based on shipments of devices. Google’s Android system powers the majority of those phones but it does not profit because its apps are not officially available. The China-based Play Store would close this gap by allowing the company to keep a percentage of sales by developers. This is the fastest growing sector of its business and makes up 50 percent of its  growth and profit.

Google’s plans face stiff competition with several major players already established in China. Stores in China are currently run by Qihoo 360 Technology Co., Baidu Inc., and Tencent Holdings, Ltd.

Google will likely require a Chinese partner familiar with the hosting sites throughout the country and necessary procedures for market entry, maintenance, and adhering to government regulations. The partner would also help create separate user identification systems and payment platforms. Revenues from the new store would be split with this partner.

Working on this plan with a mainland partner will likely help avoid previous issues with censorship. The Chinese government is more likely to allow Google to run an operation within its borders if it can present with a suitable Chinese partner who is already authorized to do business. Allegedly, Google approached Huawei and ZTE to help provide some of these services although neither will confirm these discussions.

Most Google services remain blocked by the Chinese government, so while it looks to expand opportunities in this large Android market, its efforts may not materialize in the near future, if at all. Negotiations started with officials but a launch date for the new Play Store remains uncertain.

By Jocelyn Mackie

Sources:
International Business Times
Reuters
Tech Crunch

Featured Photo by keith.bellvay – Flickr License

Main Photo by Cory M. Greiner – Flickr License

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