Rhys Blakely
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Google has taken a stake in Tianya.cn, the Chinese social networking site, broadening its presence in the world’s second-largest online market.
A spokesman for the search company confirmed that Google has invested in Tianya.cn, but declined to give further details. Reports in China suggested the holding could be as much as 60 per cent.
Google has struggled to break into the Chinese market, despite changing its name in the territory to “Gu Ge” and controversially agreeing to toe Beijing’s line on online censorship. In the search market Baidu.com, the domestic leader with about 60 per cent of the market, has nearly three times Google's number of users.
Other Western internet companies have also struggled to crack China.
The world’s largest online auction house, eBay, is being crushed there by Taobao, the domestic auction site owned by Alibaba, the company into which Yahoo! poured its struggling China business two years ago to avoid going it alone on the mainland.
However, Google has met with success in social networking in other territories. Orkut, which Google owns, is the most popular social network in Brazil and India.
The company has also indicated it is willing to play a long game to cash in on the huge potential of China’s online consumer market.
“China is a nation with a 5,000-year history,” Eric Schmidt, the chief executive, said recently. “That could indicate the duration for our patience.”
Last month, Xing Ming, president of Hainan Tianya Online Networking Technology, which runs the site, suggested that the group is pondering a float on the Chinese stock market, adding that the company had been profitable for two years.
According to iResearch, the Shanghai-based data provider, Tianya.cn attracted about 24 million users in April, making it the third most popular social network site in China.
In 2005, Lenovo, the computer maker, reportedly made a $2.5 million investment in Tianya.cn. Other investors are said to include Sequoia Capital, one of Google's own early backers.
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