Google's Chinese foray depends on local know-how

By Sophie Taylor

SHANGHAI (Reuters) - Google Inc's inroads into China relies on it linking up with local partners, navigating draconian regulations and understanding Chinese tastes to make it in one of the world's fastest-growing and lucrative Internet markets.

Rival forays by Yahoo! and eBay have misfired because those companies failed to get to grips with Chinese consumers' habits -- the result of them not hiring the right staff and not getting together with domestic dot coms.

To succeed, Google must avoid those pitfalls.

All this while stepping gingerly over an uncharted regulatory minefield. Yahoo is still smarting from criticism that it helped Beijing track down an Internet dissident.

"The media is not an open marketplace in China yet -- the state has its own agenda and has a lot of policies to regulate the market," said Edward Yu, president at research firm Analysys International.

"Google definitely has made very good strategic decisions, because they selected partners instead of going in by themselves," Beijing-based Yu added.

Added to censorship are difficulties hiring the right talent to build strong local teams with the leeway to make decisions independently of U.S. headquarters in a fast-growing market where speed makes all the difference.

Chinese rival Baidu.com Inc got its operations off the ground quickly and established its infrastructure, stealing a march on all rivals. And because it is a Chinese company, Baidu has a better understanding of how the Chinese use the Internet. Baidu has since dominated its home Web market.