Google Plans Social Networking, Mobile Investments In China

With 26 percent search market share, up from 17 percent a year ago, Google (NSDQ: GOOG) has done better than some other Western internet firms in trying to crack the nut of the Chinese market. But the company doesn’t expect to just build its way to the promised land. Kai Fu-Lee, head of Google’s China operations, told WSJ that the company is likely to make investments in both social networking and mobile firms in China, as part of a five-year plan to become the market leader. That mantle currently belongs to Baidu (NSDQ: BIDU), which claims 60 percent market share. When it comes down to specifics, the company isn’t tipping its hand.

It’s already made a few deals, including a recently revealed tiny investment — $1 million — in Comsenz, a provider of social networking a message board services. It’s also a backer, to the tune of $5 million, of P2P video service Xunlei. Of course, these deals are all small change compared to some of its bigger domestic buys — if it really wants to move the needle in China, it’s shown a willingness to buy aggressively.

One thing we can’t see happening, ever: Google exchanging its Google China operations for a major equity stake in some local leader.