The Wall Street Journal (subscription required) is reporting that Google plans to announce tomorrow (Friday) a partnership with Xunlei, a four-year-old P2P Chinese company that provides game and video downloads to its estimated 54 million subscribers.
Apparently, a Google spokesperson confirmed a jointly hosted event for tomorrow’s announcement but isn’t willing to provide much more. But China Daily reported today that Google is teaming up with Shanghai-based venture-capital firm Ceyuan Ventures to purchase a stake in Xunlei. Looks like the rumors circulating last month may come true.
Google has had issues in China since entering the search market in the country. The latest numbers from last year put Google in second place with an estimated 19.2% share of Internet searches in China, well below Baidu’s 63.7%. Incidentally, China is the second largest Internet market after the U.S., which obviously makes it a top priority for Google (even if a more difficult country to penetrate).
Hou Tao of iResearch Consulting, the firm responsible for the market share estimates above, calls a strategic alliance between Google and Xunlei a “win-win deal for both sides.” His reasoning is that both sides are likely to see serious growth by bringing together download services with search options.
I couldn’t agree more. A strategic alliance is exactly what Google needs in China…