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Google Shuts Down China Shopping Search

By PAUL MOZUR, BEIJING (WSJ): Google Inc. GOOG +0.10% shut down its modest China-based shopping search business on Wednesday, as it shifts from China’s online consumers to focus on advertising services for businesses.

The Mountain View, Calif., company said in a blog post it would shut down the service Wednesday. In China, Google Shopping Search allowed Chinese consumers to search for a range of products offered by the country’s online retailers. It competed with the much more commonly used shopping search engine etao.com, run by Alibaba Group Holding Ltd.

In a statement Google said, “Chinese merchants will still be able to use Google Shopping to reach consumers in other markets. But Shopping in China was not providing businesses with the level of impact we had hoped.”

Google doesn’t disclose statistics about its China shopping site, but analysts say that it wasn’t a major one. Earlier this year Google said that online retailers would have to pay to display products on Google Shopping, which had previously been free. The service allows product listings for parts of Europe, the U.S. and Japan.

As China’s middle class has grown increasingly Web-savvy in recent years, online commerce in the country has boomed. Online retail sales in China are projected to triple to more than $360 billion by 2015, according to a report by Boston Consulting Group.

But the market in China is highly competitive and local players like Alibaba had a huge advantage over Google, as they offered both search and sales services and entered the market well before Google opened its shopping site.

The shutdown is the latest in a string of setbacks for Google in China, where it faces tough competition from local competitors and frequent glitches due to the Chinese government’s filtering system, according to Internet experts. Since 2010, when the company said it would stop censoring Web searches and moved its servers to Hong Kong, using Google’s array of products has become cumbersome, with many plagued by slow download speeds and disruptions. Analysts attribute the problems to the government’s filters.

In September, the company closed down its China-only music download service, and in early November it faced major disruptions to services including its popular Gmail email service amid a sensitive power transition in the country.

At the time Google launched its shopping service in 2009, it held a significant portion of China’s search market and was offering other services, like the recently closed music site, to compete with local rival Baidu Inc. BIDU +2.11% But its hold on the search market has dwindled from roughly one-third at its peak to just 6% at the end of September, the most recent data available, according to research firm Analysys International.

In response, Google has been shifting the emphasis of its operations to those serving businesses from those serving individual Internet users.

Although less obvious to the average user, Google operates a range of advertising services within China, most importantly selling advertising space on its search services across the world to Chinese companies looking to target foreign audiences. The company also supplies advertising across a wide range of Chinese websites and helps advertisers figure out where to advertise to hit key demographics.

Through mobile-advertising firm AdMob, which it purchased in 2009 for $750 million, it helps developers make money from advertisements featured within applications for smartphones. Although Google’s application store, Google Play, is often hit by disruptions, its Android mobile operating system has also become the most widely used in China.

Published Date: Wednesday, December 12th, 2012 | 11:17 PM

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