To most of the world, life without Google may seem inconceivable. Perhaps the US giant thought so too when it shocked everybody by announcing its intention to walk out of China. So did the Chinese netizens' world come crashing? Did someone fail to book an airline ticket, write out a research paper, buy snake oil cream or play Mahjong online?
Not entirely. The Google Goliath has powerful rivals here — Baidu and Sohu — who cater to 70 per cent of China's search engine industry. Despite Google's desperate efforts to meet Chinese requirements, it managed to corner only 29 per cent of the market share until last year.
There's no getting away from the ‘Be Chinese, surf Chinese' mantra here. Chinese millionaires go to Sina.com to read news online; Chinese girls shop on Taobao.com; young adults shunned Facebook last year to connect on Xiaonei.com and 51.com, while the entire country instant-messages on QQ.com.
The real gainers of Google's sensational ‘exit line' were Chinese internet stocks, which soared on the prospect of grabbing a bigger market share. The mainland bourses, however, were robbed of all the excitement. Baidu, the world's eighth most visited site, jumped 13 per cent last week, but in distant New York. According to Forbes, a handful of investors in the US created massive wealth, buying call options on Baidu in 2009.
Last year, several Chin-ese internet firms such as Sina, Sohu, NetEase, Perfect World, Giant Interactive have seen their share prices skyrocket — but all on Nasdaq.
The biggest irony of all — none of these companies were considered ‘qualified' enough to list on the Shanghai bourse. The internet tarmac, like everything else in China, is a hotbed of contradictions.
It has the largest number of internet users in the world, yet it exercises an incredible level of censorship. At least 23 Chinese companies are listed on the Nasdaq and were some of the most sought-after stocks of 2009.
Yet it took the Chinese government 10 years to launch a Nasdaq-style exchange board in Shenzhen, the Growth Enterprises Board, to encourage local high tech companies. This board remains a speculators' turf, three months after its launch.
Pride of place
China has not given pride of place to its young and savvy internet firms, but its ‘tech heart' is in the right place. Last week, the state council took an important, if not spectacular, decision to boost network convergence in China. This drove up broadcast and technology company stocks and the CSI 300 Index which measures exchanges in Shanghai and Shenzhen rose 1.4 per cent.
The government will remove regulatory barriers preventing internet, telecommunications and broadcasters from providing each other's services. This will allow users to make phone calls, watch videos and surf the internet through a single network. From 2010 to 2012, the project will be rolled out in some cities for trial, before being launched nationally from 2013 to 2015.
The government will also offer financial and tax support to speed up the combination of internet, telecom and television networks, especially in rural areas. This will open huge business opportunities for equipment manufacturers and content providers and listed companies can only look up.
Shanghai East-China Computer Company surged by the daily 10 per cent limit midweek, as did Shaanxi Broadcast and TV Network Intermediary Company CEC CoreCast Corporation also hit the biggest jump range, while China Television Media and Fujian Newland Computer Company also soared on the news.
The Chinese netizen has proved to be unusually savvy. Mobile internet users increased by 106 per cent in 2009 to touch 233 million. More people have chosen to access the internet through mobile phones since the Chinese government issued third-generation (3G) licences to major telecom operators in January last year. The government also used 277.3 billion yuan, part of its 4-trillion yuan stimulus package, to develop telecommunications infrastructure.
Google may have been a little hasty in beating a retreat. In the words of Tang Jun, the former Microsoft China CEO, "To give up China means to give up half of the world."
- The writer is a freelance journalist based in China.
