CEO: Google working to grow in China

Google Inc., No. 2 in China's Web search market, is giving its local managers more autonomy and investing more in China in an effort to make up for its late entry and take the lead in the industry, CEO Eric Schmidt said Friday.

"We are catching up. Our investment is working and we will eventually be the leader," Schmidt told reporters.

Google has 22 percent of China's search market, well behind industry leader Baidu.com Inc., which has 55 percent, according to market data company iResearch Inc.

Schmidt said Google was gaining market share but he declined to give figures. He expressed confidence that its greater financial and technical resources would help close the gap.

On Friday, Baidu said its first-quarter profits more than doubled on strong traffic growth and higher advertising revenues. It said the number of active online marketing customers during the quarter grew to more than 112,000, up nearly 4 percent from the previous quarter.

Google came to China after other Internet services such as Yahoo Inc., launching its China-based search site, Google.cn, in January 2006. Google opened a Beijing research center one year ago.

Schmidt said Google plans to give its China operation, led by Kai-Fu Lee, a former Microsoft Corp. vice president, greater autonomy to develop new products and respond to the local market.

"One of the big projects this year is to push more autonomy and more decision-making to Kai-Fu and his team," Schmidt said. Asked for details, he would say only that it involved more decision-making power.

China has the world's second-largest population of Internet users, with 137 million people online, and is on track to surpass the United States as the largest online population in two years.

Baidu has tried to expand its appeal in recent months by striking deals with Viacom Inc.'s MTV Networks to distribute music videos online and with recording company EMI Group PLC for streaming music.

Industry analysts say Google's handicaps in China include its failure to aggressively promote online music and to offer its Gmail service on Google.cn. The company refrained from offering e-mail in China after the controversy over Yahoo Inc.'s China arm providing information that led to a reporter's being imprisoned.

Lee declined to say whether Google was planning to launch music or e-mail services in China.

Google did agree to self-censorship in offering a Chinese search site that omits politically sensitive information, such as details about the June 1989 suppression of political unrest in Tiananmen Square. Its agreement with China has provoked considerable criticism from human rights groups.