Google throws cash around China

The world's most popular search engine doesn't like playing second fiddle in the world's most populous country. As it struggles to keep pace with the home-grown Baidu in the Chinese search market, Google has invested in "four or five" China-based web sites, including a user-driven destination called Tianya.cn.

Last week, Kai-Fu Lee, president of Google China, bragged about these recent investments in a conversation with The Shanghai Daily. "Globally, we just typically do more investments than we do acquisitions," he said. But he refused to reveal which sites were involved, saying merely that they were "in the fields of search, entertainment, the online community and others."

This morning, however, Google confirmed its stake in Tianya, announcing that the Chinese site is offering two new services powered by Google technology. The company wouldn't give details on the investment, but a spokesperson tossed us a few words on the new services.

The first, Tianya Laiba, is an "an online community where people can connect with friends and share content," while the other, Tianya Wenda, "allows people to ask questions and receive answers from others." We give Google immense credit on both these services - if only because they avoided using the term "social networking."

It seems that Google is struggling to keep pace in the Chinese market simply because it's an American company. Based on a study by the research arm of Enquiro, a search engine marketing firm, the Chinese version of Google significantly outperformed Baidu, but it's nowhere near as popular. In the second quarter, according to research outfit Analysis International, Google handles 23 per cent of Chinese search traffic, compared with Baidu's 58 per cent.

Investing in Chinese sites, rather than acquiring them, may be a way for Google to tackle this rapidly-growing market while appearing a little less like an outsider. The company was adamant that two services it announced today are not Google services - merely "Google-powered services." "Tianya is responsible for the day-to-day operation of Tianya Laiba and Tianya Wenda," is the word from Mountain View. ®