GOOGLE'S search engine is blocked in China. But inside the Beijing offices of smartwatch maker Mobvoi Inc., the internet giant looms large.
Mobvoi relies on Google’s software to power its line of watches and smart speakers. Its engineers build apps using TensorFlow, Google’s free set of development tools for artificial intelligence. Mobvoi’s sales team targets users outside of mainland China by buying Google ads.
“It’s not just software, it’s an ecosystem,” Zhifei Li, Mobvoi’s chief executive, said of Google—also a minority investor in his startup.
Mr. Li is one of many allies Google has courted in recent years as it tries to keep a foothold in China, a market from which the Alphabet Inc. GOOGL -0.95% unit retreated eight years ago in protest over government hacking and censorship. While its core services like search, Gmail and YouTube remain blocked for most Chinese citizens, the company provides tools and support to a growing number of app developers, manufacturers and advertisers in the region, who rely on Google to reach global customers.
Now those allies will likely be crucial as Google embarks on a broader China expansion strategy, according to a number of people either involved in the effort or watching it closely. As part of a project dubbed “Dragonfly,” Google is testing a mobile version of its search engine that would adhere to China’s strict censors, people familiar with the matter said. To convince the Chinese government to allow such a move, Google can point to its local partners as examples of how the company contributes to economic growth. That is in contrast to rival Facebook Inc., which also covets the China market but has had less success establishing a beachhead.
By working with local players, Google is building the case that it is boosting the country’s economy. “Chinese authorities want to support domestic champions as much as possible,” said Mark Natkin, managing director at Beijing-based industry researcher Marbridge Consulting.
Google’s existing relationships could also provide customers-in-waiting for additional services it sells, like cloud hosting and business apps.
Launching a search engine is far from certain and hinges on the approval of China’s authorities, who frequently wield their power to block American tech giants from entering the market and competing with homegrown rivals. The plan also faces certain backlash from critics back home; six U.S. senators in a letter have called the effort “deeply troubling” and said it risks “making Google complicit in human rights abuses related to China’s rigorous censorship regime.” Google has declined to comment on the letter from senators.
In his three years as Google’s chief executive, Sundar Pichai has been a frequent visitor to the region, meeting with top Chinese officials and encouraging businesses to use Google’s free open-source tools like TensorFlow and Android—the mobile operating system which powers three-quarters of all Chinese smartphones.
Google’s investments in China this year have included $550 million for a 1% stake in local online retailer JD.com , along with investments in Chushou, a live video-streaming site, and Manbang Group, a truck-hailing company.
Google has held talks for more than a year with local partners, including Tencent Holdings Ltd. , about offering cloud-hosting services in China, said a person who was briefed on those talks. Under the scenarios that have been proposed, Google would sell software and hosting services that would run on a data center owned by a local company, the person said. The status of the talks, which were earlier reported by Bloomberg, is unclear.
A spokesman for Google declined to comment on the company’s talks with Chinese partners. Tencent didn’t respond to requests for comment.
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