Despite having its YouTube site blocked in China over the past few days, Google is bullish on its opportunities there and sees China as a key to weathering the current U.S. recession.
Google Inc.'s position as the most popular Internet search site and sales from fast-growing Asian markets such as China will help the company weather any U.S. recession, Chief Executive Officer Eric Schmidt said.
"One of the very good sources for Google is the very rapid growth in Asia,"' Schmidt said today at a briefing in Beijing. Historically, people tend to shift their money to the most "highly measured"' advertiser when there are "economic difficulties," he said.
And Google isn't alone in looking abroad for growth opportunities. Warren Buffett's strategy over the past few years to "buy foreign" is already paying off, as manifested when he overtook Bill Gates this year as the richest person in the world.
Buffett has been devoting more of Berkshire to non-U.S. companies and investments, reasoning that Americans' love for buying from abroad has led to higher trade deficits and a falling dollar.
"At Berkshire, we will attempt to further increase our stream of direct and indirect foreign earnings," Buffett said in his annual letter to Berkshire shareholders.
Google already generates about half its sales outside the U.S. and it seems that trend is likely to continue. Tucked quietly away in the Bloomberg article is a startling revelation from Google:
Today, March 17, 2008, China overtook the United States as the biggest online market in terms of total number of Web users.
According to the article, China added an astonishing average of 6 million Web users a month last year for a total of 210 million. Those figures come from the Chinese government-backed China Network Information Center. The U.S. was home to 216 million users at the end of 2007, based on Nielsen-NetRatings figures. Given that rate of growth in China and the virtually stagnant growth in the saturated U.S. market, it makes sense that China now has approximately 225 million Web users compared to less than 220 million in the U.S.
Online advertising revenue in China is tracking the user growth figures. According to the article, Web search sales for China may nearly double this year to 5 billion yuan ($706 million) and could reach 22.1 billion yuan by 2012, researcher BDA China Ltd. projects.
"The Chinese online advertising market is one of the best places to be," said Elinor Leung, an analyst at CLSA Ltd. in Hong Kong, "Even if the U.S. slows, China is still going to see quite strong economic growth." Leung has a "buy" rating on Baidu.com Inc., China's biggest search site.
Links:
Google Says Search, Asian Growth to Help in Recession - Bloomberg.com
Warren Buffett: Buy 'foreign' - Reuters
