Google Buys Stake in Xunlei
Google announced on Thursday that it would purchase a small state in Chinese web site Xunlei.com. The company, located in Shenzen, allows users to download music and video from the Internet.
If Google made a New Year’s Resolution to increase its presence within the Chinese nation in 2007, then the company is off to a good start.
Just a day earlier, Google announce a partnership agreement with China Mobile to provide its search technology to the nation’s mobile users. In buying a piece of Xunlei, an subsequently providing search services to the download site, Google opens up yet another platform for its products to the elusive Chinese Internet user base.
The company has purchased this opportunity at a bargain price. According to an International Herald Tribune article on the deal, sources close to the deal say that Google paid about $5 million for a 4 percent stake in Xunlei.
The content restrictions that the Chinese government has placed on the Internet have been a bane for U.S. companies looking to get a foothold in the market. China boasts an online user base at somewhere around 130 million users, second only to the United States in that regard.
Since it is extremely difficult for foreign nations to establish any kind of presence within the Chinese market, partnerships like the ones Google has made with China Mobile and Xunlei become increasingly important, as local Chinese startups tend to draw a large percentage of the nation’s user base.
David Barboza talks about this in the article:
So, it would appear that Google has a long mountain to climb in order to catch, much less surpass Baidu (and most likely other local companies that offer other services similar to Google’s) in terms of Chinese market share.