Peter Lui, Google’s former chief financial controller for the Asia Pacific region recently told Bloomberg News that if the search giant did pull out of China, then “there is no way Google can ever come back.” That’s a sobering statement considering the way the world economy is moving.
While the United States is still the dominant economy in the world today, many economists believe China will eventually supplant the U.S. as the preeminent economic world power. Forecasting the future is a tricky business, mind you, and China could fail to meet financial expectations. However, even if China doesn’t rise to economic supremacy, it’s still a compelling market for Google’s search and mobile device businesses.
There are between 500 and 600 million mobile device subscribers in China today, depending on whose numbers you believe. It’s not clear how many of those users have mobile Internet access, but metrics firm eMarketer is forecasting that China will have 957 million mobile Internet subscribers by 2014. That means in four years the number of Chinese citizens using the mobile Internet will be three times larger than current population of the United States. EMarketer admits that monetizing Chinese Internet usage is not as profitable as it is in the U.S. market, but that could change over time.
The fact is, China has a growing population of Internet users, all of whom will need to use a search engine, e-mail, Web apps, and more. And if Google leaves China, very few of them will be using Google for these online activities. Google is not the leading search engine in China; the local service Baidu dominates, and has already benefitted from rumors of Google’s retreat.
If Google leaves China, the company could end up permanently cutting itself off from what many believe to be a key world market. Google’s competitors aren’t leaving China, and there’s no reason to believe Google’s actions will inspire other Western companies to follow its lead.
Google may have reservations about continuing to deal with China, but shouldn’t the company have even greater reservations over cutting itself off from such a huge base of potential customers? Moreover, what will Google stockholders think if the company does announce it’s pulling out of China on Monday?