Top 15: Google — Its Search Doesn't Even Work in China. So Where Does Its 6-Billion-Yuan Business There Come From?

Google, Twitter, Facebook: you can't reach them from China, and they have no users here. But they do have customers.

Google's business in China has just picked up a new competitor.

On March 10, Twitter announced that it would formally open an office in Hong Kong. A tweet posted soon afterward by an account signed "Twitter Advertising" put it more bluntly.

"Hello everyone! Twitter's new Hong Kong office, led by Peter Greenberger, is ready to help Chinese companies go global." The tweet came with a street snapshot of Greenberger in Hong Kong.

"If Chinese advertisers want to reach consumers in the US, Brazil, Indonesia, the UK, India and Europe, we are without doubt the best and most efficient advertising platform," Greenberger later told Campaign.

Like Google and Facebook, Twitter is a tech giant on the far side of "the wall." In a sense these companies have "given up" China's vast user base, but that doesn't mean they do no business in China.

"Now we can go to Huawei, ZTE and Xiaomi and tell them: everyone is talking about phones on Twitter, so start thinking about how to tweet about your products. Better still, you can find people the moment they've tweeted and @ them," Greenberger said.

He has a point. In September 2013, Hugo Barra, formerly a global vice president at Google, joined Xiaomi. In May 2014, Lei Jun told Forbes plainly that Xiaomi would push into overseas markets.

Lenovo began its overseas push as early as 2005. In October 2013, Ashton Kutcher, star of Jobs, became a Lenovo product engineer, partly to polish the company's image abroad. Today 62% of Lenovo's sales revenue comes from overseas, and last year CEO Yang Yuanqing said the bigger opportunity for Lenovo's smartphones lay outside China.

Alibaba listed in the US last year, and Tmall Global shows how hungrily it eyes markets abroad. More and more Chinese companies, Wanda among them, are making internationalization a new corporate strategy.

But all these companies eager to expand abroad share one problem: how to build brand awareness. They are household names in China, yet even Huawei, after years of fighting in overseas markets, has still not built a strong brand image there.

That is exactly the opening for Twitter, Facebook and Google, with their huge global networks. Last May, Facebook was reported to be considering a sales office in China to serve advertisers there, and Bloomberg reported at the time that it had leased more than 800 square meters of office space in Beijing's Fortune Financial Center.

Twitter's plan to court Chinese companies may be news now, but for Google it is old news. Google has been the overseas "spokesman" for Chinese companies for seven or eight years.

That explains why Google China, founded in 2006, still owns its own office building in Tsinghua Science Park in Haidian, even though it shut the Google.cn page in 2010 and moved its service to Hong Kong. It has stayed in the country in another form.

Of Google China's more than 800 current employees, the largest group is the salespeople who serve Chinese companies. According to an iResearch report, Google China's online advertising revenue topped 6 billion yuan in 2014.

How exactly does Google sell advertising in China?

We recently interviewed Huang Xiulan, general manager of Google China's large-customer business. She joined Google China in 2007 and has spent the years since helping Chinese companies expand into international markets. We asked her what kind of business it is to advertise abroad on behalf of Chinese companies.

QDaily: What exactly does "helping Chinese companies expand into international markets" mean? Who are Google China's clients here?

Huang Xiulan: It means helping them sell their products and services around the world and promote them globally. I have been doing this for seven or eight years, and in that time I've watched Chinese companies' overseas business grow. Over the same period, the way international trade is done has changed a great deal, mainly because of the internet, and especially the mobile internet.

By industry, the overseas business we work on most, and which is growing especially fast, falls into four areas: IT, e-commerce, games and travel.

The mobile internet is developing very fast, and Chinese phone makers like Xiaomi, Huawei and ZTE have all gained a lot of international market share. But abroad they may have little brand recognition, so they are eager to build a brand.

The second is e-commerce. We used to sell products by going to all kinds of offline trade fairs; in the internet era, a lot of cross-border e-commerce companies have grown up. People in China may know only Taobao, JD.com, Tmall and Yihaodian, but in fact China has a great many e-commerce companies in international trade, selling every kind of Chinese product overseas.

The third fast-growing industry is games, which has taken off in the last two years. China actually has a huge number of game developers, and in the past most game companies earned most of their revenue at home. Once the mobile internet arrived, borders disappeared: develop a mobile game, put it on Google Play or the App Store, localize it, and gamers all over the world can easily play it. So exports here are growing very fast too.

The fourth is travel. Many people now come to China from abroad as tourists, so some Chinese bodies, such as the Chengdu and Hangzhou tourism bureaus, promote their cities and run ads overseas to draw foreign visitors.

QDaily: Two small follow-ups. First, e-commerce: is it mainly B2B, or something else?

Huang Xiulan: Actually it's both. Around 2008 and 2009, B2B dominated, because the internet wasn't as developed as it is now. Many Chinese suppliers still sold wholesale to retailers in the US and other countries, who then resold the goods to consumers. Alibaba, Made-in-China and Global Market are all B2B, and they are all long-standing clients of ours.

But in the last two years B2C has taken over. At Alibaba, for example, the fast-growing foreign-trade business of the past two years is actually AliExpress.com, which sells straight to consumers. Besides AliExpress.com, typical examples include LightInTheBox and DHgate. LightInTheBox, founded in 2007, is now listed on the New York Stock Exchange. We started working with them when they were a team of six or seven; now the company has nearly a thousand people.

QDaily: Second, games. You said they have gone overseas in a big way in recent years. Can you pin down when?

Huang Xiulan: I'd say growth started in 2013, and 2014 was the breakout. It rose with the mobile internet. China has a great many game app developers, making mobile games and some browser games, and they all want to be promoted overseas. Typical clients include Kunlun, IGG and Elex, and there is a whole group of export-focused game companies that earn most of their revenue abroad.

QDaily: You mentioned that Chinese companies run into problems going international. What are they?

Huang Xiulan: There are three main challenges. First, Chinese companies have little brand recognition abroad. Look at Huawei, such a big company. It should be a household name in China, and it once had a fairly high share of Europe's telecom-equipment market. But because that was a B2B product, when it started making phones, nobody knew who it was.

Second is how to sell Chinese products overseas: how to find buyers and users, and how to define the target audience. That's another problem they face. These days you can't do it through trade fairs, which are inefficient and return very little, so one way or another it has to happen through the mobile internet.

Third, they don't know the market. Many people in cross-border e-commerce have never been abroad and can't speak English, but the business still has to get done.

QDaily: Where does Google come in?

Huang Xiulan: First, Google has many free tools and products that help these clients understand overseas markets: consumer preferences, what sells well in which market, and seasonal factors. Global Market Finder, for example, helps companies research new markets. A company that wants to enter Brazil can use it to see how many people there search for which products, how big the volume is and so on, and open up new markets that way. There are also Google Insights for Search, Google Trends and Google Analytics.

Second, our sales team helps clients build overseas digital marketing plans. In the industries I mentioned, many clients spend part of their marketing budget on Google and set some goals, and we help them place ads abroad. Google's digital marketing offering includes several types: Google search keyword ads, Google display ads, video ads, mobile ads and so on.

Third, we publish industry reports that help advertisers understand overseas markets in mobile, games, electronics manufacturing and other sectors.

QDaily: Take games as an example. How does Google help game companies advertise?

Huang Xiulan: A few ad formats work well for games. One is YouTube TrueView. Players play mobile games on their phones, and YouTube is the third-largest app on both the App Store and Google Play, so its user base is huge. We place ads on YouTube's mobile app. (Note: as of February 2015, YouTube had more than 1 billion monthly users.)

Another is Google AdMob, the world's largest mobile ad network. YouTube is Google's own app, while the ad network includes many other apps. Those apps are in fact keen to join: as distribution channels, they get advertisers through Google AdMob. So they share in the revenue, and we can place ads in more places.

QDaily: Google is a foreign company. How does it understand what local Chinese clients need? Isn't there a risk of losing touch with the local market?

Huang Xiulan: We have sales teams in Beijing, Shanghai and Guangdong, and they work very closely with clients. We stay close to the local market while sitting inside a big international company, and only by combining the two can we really help Chinese companies go abroad well.

We also have a Global Expansion Team in Dublin that speaks more than twenty languages. If our clients want to run ads in Italy or France, the languages are French, German, Italian and so on, which our team members don't speak. So on one hand we hire some foreigners onto our own team as export consultants, and they help clients localize their language. On the other, since Chinese clients export to more than two hundred countries, the languages we must cover are extremely varied, so we can also call on the Global Expansion Team for help.

QDaily: I've been to Google events such as Think Platform, and my impression was that, because of the information gap, Google has been acting as a teacher to advertisers. What does Google get out of passing on information this way?

Huang Xiulan: Google has a display ad network, and of course Facebook and Baidu have their own. But for advertisers, getting ads into all these different display networks gradually becomes inefficient and hard. Think Platform is a new revolution in marketing. It works like the New York Stock Exchange: through an Ad Exchange, all display ads are pooled in one place. With the ad inventory gathered there, a DSP (Demand-Side Platform), a real-time bidding system, lets advertisers buy display ads more flexibly. Different companies run different Ad Exchanges. The old way of buying was fairly primitive and not audience-driven; now ads are basically targeted at the user. The technology has changed a great deal and is becoming the direction of the future, so we want to introduce it to advertisers.

QDaily: Google's business in China is doing quite well, since its strengths are so obvious. Now Facebook and Twitter are doing similar things in the Chinese market. Is that a challenge for Google, or something else?

Huang Xiulan: Whether it's Facebook, Google or anyone else, each channel offers advertisers something different. We each have different value and different strengths, and there's no way to compare them, because the platforms are different, the users are different, and the services we provide are different.