One of the first investors in China’s biggest search engine said Tuesday that Google has “a chance” of making it in China.
Speaking at the CNBC East Tech West conference in the Nansha district of Guangzhou, China, the managing partner of venture capital firm GGV, Jixun Foo, said the U.S. search engine may have to adjust to local demands in China to become a success.
“There is always a chance (of a return) … The market is big enough but there is a regulatory factor that Google has to adjust itself to, or any foreign companies have to adjust itself to. There is also the fact that you have to localize your service,” he told CNBC’s Deirdre Bosa.
Jixun Foo’s first investment as a venture capitalist was in Baidu, China’s biggest search engine and a potential rival to Google should the U.S. tech giant return to the Chinese market. He is adamant that Google could successfully make a comeback in China, eight years after it pulled out of China, by following Baidu’s own localized strategy.
“When Baidu launched its search engine, it localized its service with specific needs of the consumer. At the time of 2003, it launched an MP3 search. That was something the consumer wanted to have. If Google has the will, there’s a way,” said Jixun Foo.
Google closed its internet search engine service in mainland China in 2010, saying it was no longer willing to censor search results. It instead redirected users to an unfiltered search engine from Hong Kong. China, at the time, called Google’s move to stop censoring results “totally wrong.” However, a reversal from the Silicon Valley giant is reportedly on the cards as U.S. tech firms look to enter the world’s second-largest economy.
The venture capitalist never thought Baidu would be as big as it has become since its launch almost two decades ago.
“When I invested in Baidu in 2000, I wasn’t sure where Google was. I thought it was B2B (business-to-business) services. I said information services had demand and that search has value. That is the underlying thesis.”
He added that a combination of “trends and people,” in particular Baidu founder Robin Li, had helped him to make a “bet” on the start-up. Baidu has since become one of China’s leading search engines and has evolved in recent years to become a technology conglomerate with ventures in AI platforms.
Venture capital firm GGV, based in Silicon Valley, Shanghai and Beijing, has raised $2 billion in 18 years. Investments include mobile payments giant Alibaba and ride-sharing firm Didi Chuxing. Jixun Foo believes that tech companies in particular are raising large amounts of capital to finance growth more so than ever before.
“More people are raising a large amount of capital to finance the growth of companies, tech companies in particular”.
Jixun Foo said firms choosing to do business in Hong Kong should be “appreciated in the China context.”
“The choices are pretty open. What Hong Kong has changed pretty recently has allowed companies to go IPO (initial public offering) while maintaining a level of self control. Hong Kong being close to China (means) the proximity does help. Companies, especially those with a decent amount of profitability, are choosing Hong Kong. It’s a good choice.”
“Comparing Alibaba to Amazon is an easy reference. But the whole landscape and infrastructure in China is very different. Alibaba is becoming a financial services provider. We have to address on what the market looks like, what the consumer demands and how the market is evolving. These companies are evolving with the market and so they are becoming a very different animal to their U.S. comparisons.”