INTERNET: Google Fuels China Return Talk with New Shenzhen Center

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Bottom line: Google’s new opening of an experience center in Shenzhen is the latest signal of a planned return to China, which could include the launch of a Google Play Store and Nexus smartphones in the market by year-end.

Google opens experience center in Shenzhen

After a few months of relative silence, global Internet titan Google (Nasdaq: GOOG) is back in the China headlines with a new move that’s restarting talk of a return to the market after a 6-year absence. This particular China homecoming has now been in the headlines for about a year, meaning it’s not really new and would be quite a disappointment if it doesn’t happen. Still, China is a notoriously difficult place to do business, especially in sensitive high-tech areas involving the Internet, and there’s still a small chance such a homecoming plan could collapse.

All that said, let’s look at the latest Google homecoming signals that come in a report saying the company has just opened an experience center in the southern boomtown of Shenzhen. (Chinese article) There’s very little detail about the opening or what exactly the center will do, and western media haven’t even carried any reports on the new center.

But one of the most significant details appears to be attendance at the event by a relatively high national government inspector. Such attendance isn’t that uncommon at these kinds of events, since China has plenty of government officials and always likes to parade them at this kind of opening. But usually this kind of event would be attended by a current local official rather than a retired person of such stature.

But most China Internet watchers also know that Google has had a stormy relationship with Beijing since 2010, when it abruptly shuttered its China search service after refusing to continue self-censoring the site for sensitive content. Google moved the site to Hong Kong after that, though the Hong Kong site is currently blocked in China. Google also maintains a China page at Google.cn, though that only redirects people to the blocked Hong Kong site and also contains a link to its translation service.

Steady Signals

But returning to Shenzhen, the participation of this former State Council inspector, named Liu Ji, at an event alongside Mandarin-speaking Google China chief Scott Beaumont has media calling this the latest sign of an upcoming return to the market for the US Internet giant. Such signals have been coming at a relatively steady clip since about a year ago, when media first began reporting that Google wanted to open a Chinese version of its app store and was taking steps in that direction.

It’s not difficult to understand why Google wants to return to China, since the country is the world’s biggest Internet market, and also the biggest market for smartphones. Chinese people love to surf the Internet on their smartphones, and the big majority of those are powered by Google’s free Android operating system (OS).

Yet Google hasn’t been able to take advantage of that fact, since the Chinese smartphone brands that dominate the market strip out most or all connections to Google products and services from their Android systems. Google’s global app store, called Google Play, is currently blocked in China.

Roll-out of a Chinese Google Play Store would send a clear signal that Beijing is welcoming the company once again, which might prompt some of the Chinese smartphone brands like Oppo and Xiaomi to be more welcoming as well. Google already has a partnership with leading Chinese smartphone maker Huawei, which last year became the first company in China to manufacture Google’s Nexus brand phones.

Most of the latest signals pointing to a China homecoming have been very indirect, including Google’s hosting of an entrepreneur even in Beijing in April (previous post), and a visit to the country by new CEO Sundar Pichai in the same month. (previous post) Google is usually quite low-key and doesn’t publicize these kinds of moves, especially in such a sensitive market like China.

But it also seems to be quietly encouraging media coverage for such events to show its interest in the market. Accordingly, I expect we’ll see a pick-up in signals over the next few months, which could culminate with the launch of a Chinese Google Play store and possibly Nexus phones in China by the end of this year.

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