The owner of the worlds most popular Internet-search engine last week named two people to replace Kai-Fu Lee, who resigned as president of its China operations to run a $115 million venture capital firm. Boon-Lock Yeo will oversee engineering and John Liu sales.
The split leadership model that Mountain View, California- based Google ended in China only three years ago may slow decision-making in the largest online market by users, analysts including Jiao Jie said. That could hamper efforts to catch Beijing-based market leader Baidu Inc. and handle a government called the worlds most aggressive censor.
“Business conditions in China favor having one, well-known person running a company,” said Jiao, who covers the Internet market for Beijing-based research firm BDA China Ltd. “Change happens very fast in the Chinese Internet market. Having two or three people making decisions can lead to trouble.”
Lee, 47, leaves after four years of jostling with a government that accused Google of spreading pornography and blocked some services, including its YouTube site. Lee declined a four-year extension offer, according to a Sept. 4 entry on his Sina.com Web log.
Difficult Market
Lee left to pursue his new project, Innovation Works Inc., and not because of Chinas recent criticism or pressure from Google headquarters, he wrote Sept. 6.
“I view China as a very tough market because of the government and the way they participate with the companies,” said Clayton Moran, an analyst at Benchmark Co. in Boca Raton, Florida, who advises holding Google shares.
Herdict.org, a project of Harvard Universitys Berkman Center for Internet & Society, estimates YouTube and Facebook Inc. were among 70 sites blocked in China during the past week.
Dividing company leadership between engineering and sales is comparable to practices worldwide, said John Pinette, a Google spokesman in Hong Kong.
That structure didnt work in December 2006, when Johnny Chou resigned after sharing duties with Lee for about a year. Sharing power also didnt work at Sina Corp., Chinas biggest Web portal, where the stock price fell 35 percent and there was a hostile takeover attempt during the 2½-year shared reign of Duan Yongji and Daniel Chiang.
High Standing
Google recruited Lee in July 2005 from Microsoft Corp., prompting the worlds biggest software maker to sue on grounds the job violated Lees non-compete agreement. The sides reached an undisclosed settlement.
Yeo was director of Googles engineering office in Shanghai and Liu was president of Seoul-based SK Telecom Co.s China operations for six years before joining Google.
The pair will try to build on Lees progress of almost doubling Googles share of Chinas paid-search market to about 30 percent. Baidus share is about 60 percent, according to Beijing-based researcher Analysys International. Chinas estimated 338 million Internet users account for only about a quarter of the population.
Mission Unchanged
Yeo and Liu said Googles strategy wont change.
“We at Google China still have the mission to keep innovating for our customers and users, to have the best product and best service,” Yeo said at a Sept. 7 news conference.
China is Googles most important market outside the U.S., said Allen Wang, who left Google in 2006 after serving as chief marketing officer for the Asia Pacific division.