INTERNET: Google’s Page Embraces, Distances Self from China

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Bottom line: Larry Page’s latest remarks are the newest signal that Google is working to return to China with a local version of its Play store and Nexus phones, as it tries to open a new chapter in its tense relationship with Beijing.

Larry Page hands off Google China strategy to new CEO

Observers are putting the latest China comments from one of Google’s (Nasdaq: GOOG) co-founders under the microscope, trying to figure out the company’s intentions towards a market that it both loves and hates. The bottom line seems to be that Larry Page wants to personally distance himself from China, following his company’s high profile spat with Beijing over censorship that saw Google withdraw from the Chinese search market in 2010.

But at the same time, Page wants to let others take Google back into China, in a nod to the importance of a market that has become the world’s largest for both smartphones and Internet use. That’s probably quite a prudent approach in face-conscious China, where personal relationships are a key element to doing business. That same principle also means that meetings between people with strained relationships should also be avoided, which is what Page appears to be doing by personally distancing himself from Google’s future operations in China.

The latest remarks by the media-shy Page come against a bigger backdrop that has seen growing signs that Google is moving behind the scenes to try to open a Chinese version of its Google Play app store. Such a store would compete with similar China-based app shops from most of the world’s major smartphone makers, including Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). Such a store would also probably come with a concurrent launch for Google’s own Nexus brand smartphones in China, which would be part of its broader homecoming to the country.

Page’s rare remarks on his company’s China strategy came at a forum where he was speaking in California this week, and center on two particular comments he made. In one of those, he said he was no longer making decisions about Google’s China strategy, and had handed off that responsibility to Sundar Pichai, Google’s newly-appointed CEO. (English article; Chinese article)

Still Thinking of China

Pichai assumed his position following Google’s own recent reorganization, which saw Page relinquish his Google CEO job to take the helm of a new parent company called Alphabet. Page added that he still helps Pichai “think about” the company’s China strategy, but that the question itself has been delegated to the new Google CEO.

In his other China-related remark, Page said that Google has always had operations in China but would “like to do more”. (English article) The first part of that comment is indeed true, since Google never completely withdrew from China after its 2010 spat with Beijing. It has maintained sales offices in China, and to this date also maintains its own largely inactive website at Google.cn. It also has a huge, low-key presence in China through its Android mobile operating system (OS), which powers most of the smartphones made by domestic Chinese brands like Xiaomi, Huawei and Lenovo (HKEx: 992).

So now that we’ve summarized Page’s comments, let’s try to figure out what they mean. The quick and easy answer is that they seem to reinforce all the other latest signals that indicate Google is working actively to open a China app store and bring its Nexus phones to China. In terms of doing more in China, there really aren’t many other areas Google could enter due to Beijing’s strict Internet controls. By putting Google’s China strategy clearly in the hands of a new CEO, Page is also quietly signaling he wants to put his own strained relationship with Beijing in the past and hopes Beijing will do the same.

On the technical front, the latest signals of Google’s intent came out last month when some techies discovered the company had set up servers in China and was registering domain names related to its app store. (previous post) Page’s remarks certainly don’t do anything to quash all the talk of a China homecoming, and instead seem to be his low-key way of confirming the company continues to work behind the scenes to return to the country. That’s likely to happen soon, probably in the next 6 months, as both Beijing and Google look to put their stormy relationship in the past and try to kick off a new era of friendlier relations.

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