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Google eyes China's mobile market

Google is in talks with China's largest mobile phone company in a move that could see the American group dramatically increase its controversial presence in the communist state.

China Mobile, which has some 260 million subscribers, today said it is holding discussions with the online search and advertising company over mobile services.

"I recently met with Google’s CEO for the second time. And we both share the same idea: how to turn cell phones into a new kind of Internet search engine," Wang Jianzhou, chairman and chief executive of China Mobile (Hong Kong), told reporters.

Mr Wang did not elaborate on what form any eventual deal could take. But one option would be a tie-up similar to that Google announced today with KDDI Corp, Japan's second largest mobile group.

KDDI has agreed to use Google search technology to "provide direct access to music, applications, books and magazines, shopping and other information", it said.

The company added that targeted advertisements "based on search terms" will be displayed alongside search results on KDDI's "au" mobile phones. No financial details of the deal were revealed.

Winning access to China's rapidly growing base of tech-savvy consumers through a similar deal would fit with Google's strategy.

Google last month rebranded itself as "Gu Ge" - or "Harvesting Song" - in China, a move it said demonstrated its commitment to building its business in the country.

The marketing push followed Google's decision to follow arch rivals Yahoo! and Microsoft in China through its site. It was fiercely criticised for doing so on Beijing's terms and for blocking searches on its sites for sensitive subjects such as "Taiwan" or the 1989 Tiananmen Square massacre.

At a conference last month in Beijing, Google's chief executive Eric Schmidt said he believed that "the decision that we made to follow the law in China was absolutely the right one".

It has been suggested that Google could use part of its $10 billion cash pile to extend its operations in China, a territory where mobile phone and internet adoption are accelerating.

Nearly 25 million mobile phones were sold in the Chinese market in the first quarter of this year, up 15.3 per cent from the same period last year, according to figures published by the China Centre for Information Industry Development (CCID) on Monday.

Meanwhile, a recent report from, China's largest web portal, suggested that China has now surpassed the United States in Internet usage.

Dr Charles Zhang, the company's chief executive, said there are at least 150 million Chinese internet users, and there could be as many as 200 million.

According to Nielsen NetRatings, the web analysts, the US had 154 million active users in January 2006.

Google's first significant investment in China took the form of a 5 per cent stake in Baidu, a leading Chinese search engine. But senior Google executives admitted that the small share did not give the company enough purchase in the country.

Google did not immediately respond to a request for comment.

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