By Perry Wu
I often get press releases from technology companies doing great things in China, and then I also get dubious releases from smaller companies who want to create a buzz around something insignificant. But rarely do I receive a press release like the one that landed on my desk today from tech giant Google and China.com about inconsequential business dealings.
The release says, "Google will power search services on China.com’s simplified Chinese portal and China Search site (zhonghua sousuo). Since forming a partnership with Google in July 2006, the world's leading search engine technology company has been powering web search and AFS (AdSense For Search) services for China.com’s traditional Chinese and English sites, as well as providing AdSense services."
Releases like this upset me because for the clueless armchair China investor sipping chamomile tea in Iowa, it appears like a potentially big move. But the reality is this: anybody with any website or blog can do pretty much what China.com is doing, for free. And many websites do integrate Google's search capabilities into their websites without so much fanfare. Poor Dr. Kai-Fu Lee, president of Google Greater China, even was quoted in the press release. Google should have had someone more junior placed within this release.
Rick Munarriz from The Motley Fool puts it best when he says, "Don't get too excited. Despite watching over a juicy domain like China.com, CDC is mostly an enterprise software specialist. In fact, its online portal and media services businesses accounted for just $2.1 million in revenues during the company's first fiscal quarter. Revenues actually fell by 30% in that segment over the past year, accounting for less than 3% of the $91.3 million in total revenue reported by CDC during the period. It's a steep cyberspace dip in a booming market that is going the other way, making this deal as important for CDC as it is for Google."
I agree with Munarriz that this is much ado about nothing. China.com is a second-tier portal, at best, in China and Google is also far from tops in China's search engine race. This press release is all about two struggling companies in China trying to appear bigger and more aggressive. Add two negative numbers and the result is further negativity.
But what is also upsetting, and something wayward investors might not realize, is that China.com and Google seem to not have even done much since their last deal was inked last year. In the current press release, China.com alludes to that deal last year when it says, "In 2006, [China.com] was chosen as the first company to host Google's Video Adsense which serves video ads targeted at China's English-speaking audience."
Huh? Where? I am probably one of the few frequent visitors to China.com's English-language portal, but I've never seen these video ads. And even before China.com became "the first company" in China to host video ads targeted at English speakers, this website ChinaTechNews.com was already hosting video ads from Google targeting China's (and the world's) English-speaking audience. And I know of other English-language websites in China that had (and still do) hosted Google's video ads prior to China.com's "first" deal. As the Chinese say, this publicity is pretty "feihua".
CDC Corporation owns a majority stake in Hong Kong listed China.com. CDC has been on an upswing with plans to list some of its gaming and software subsidiaries separately. Its original business was as a Chinese portal via its China.com platform, but that section of its business has been slacking and isn't a viable entry point for netizens anymore. Press releases like the one issued today are meant to rejuvenate exposure for China.com, but because they cover dubious dealings, they do little more than elicit a yawn.
About the author:
Perry Wu is a writer and correspondent for ChinaTechNews.com and can be reached here at the site. Perry Wu does not hold any positions, long or short, on any of the Chinese or American company securities mentioned in this article.