Google profile in China shrinking

A year after a public spat with Beijing over censorship, Google Inc. says its business with Chinese advertisers is growing even as the Internet giant's share of online searches in China plunges.
A major Chinese portal announced last week it would no longer use Google for search, compounding its rapid loss of market share since March last year when it closed its local search engine. The future of a Google map service that is a key part of its remaining appeal in China is in doubt.
Google's main presence in China has become its advertising sales offices, an unusual situation for a company that dominates the Internet elsewhere.
Google risked being completely shut out of China after it angered Beijing by announcing last January it no longer wanted to comply with Web censorship. It dodged that fate but without a flagship local online presence, analysts say Google will fall further behind local industry leader Baidu Inc. as a search provider, while the controversy makes it hard to line up Chinese partners for other ventures.
"Chinese companies will think twice before they can have any kind of relationship with Google," said Edward Yu, president of Analysys International, a research firm in Beijing.
Google, based in Mountain View, California, says it sees its biggest opportunities in China in selling advertising on behalf of local websites or to companies that want to reach customers abroad through its global sites.
Google was allowed to keep advertising sales offices in China. Beijing had an incentive to let those stay, because they benefit local websites and advertisers. "Google's revenue in China has grown year-on-year," said a company spokeswoman, Jessica Powell, in an e-mail. "Our business in China is doing well. We have hundreds of partners large and small who we continue to work with."
Yet its public relationship with Beijing is chilly. After Chinese authorities stepped up Web censorship following pro-democracy protests in the Middle East, Google said last month the government was obstructing access to its Gmail e-mail service and trying to make the blockage look like a technical problem. The government denied the accusation.
This week, the government newspaper Economic Daily said three Google units that deal with research and development, customer support and advertising were under investigation for possible tax offenses. State media played up the report and one newspaper called the company "Brother Trouble," a play on its Chinese name. Google said in a statement, "We believe we are, and always have been, in full compliance with Chinese tax law." Mainland users can reach Google's Chinese-language site in Hong Kong, a self-governing Chinese territory without Web censorship.