I had a pleasure of interviewing Dr. Mathew McDougall of Sino Tech Group in Beijing about the state of search market in China. Being a Westerner living in China, he has a great insight about how the business works in China and how the foreighn companies hit & miss trying to tap into the market there.

Q1. How long have you worked in the search marketing industry?   What’s the biggest changes you’ve seen over the years related to the industry?

I have worked in the technology industry for 18 years, specially in Search for about  the last 8 of those. The landscape in this time has seen a lot of consolidation of company’s, the cleaning up of black hat practices (in some mature markets) and the evolving of Search into a legitimate digital channel by marketers (and agency’s)

Q2. What’s your description of the SEO/SEM industry in China? I’m sure that each Chinese speaking market (Beijing, Shanghai, Hong Kong, Taiwan, Singapore, etc.) has its own characteristics, such as popular search engines. What are some of the differences?

I have heard some call Search in China, “The wild west” … I dont think it is that bad but would say the Search market in China is still in it’s infancy. Given this, SinoTech Group spends a lot of time educating marketers about the merits of Search.

We have continued to see our largest search engine, Baidu dominate the market (still holds 62% market share) and they are bringing a lot of new products to bear over the past few years. Google also has managed to slowly increase market share (now about 21%) but the likes of Yahoo! and Souguo are very much being squeezed.

The SEM approaches (and search strategies) are different for Baidu and Google- this needs a completely separate blog posting on this topic. Baidu is refining this as we speak and only released an API for agencies to use for automated keyword buying earlier this year.

Q3. Has SEO/SEM become one of the main stream marketing means in China, or does it still have a limited market? Are local businesses, especially the mid-small businesses using SEO/SEM to market their businesses, too?

There is a lot of SME’s using Baidu SEM, although most would not know it. A large network of Baidu keyword resellers work this SME channel and do the keyword purchasing on the behalf of small business (dry cleaners, flower shops etc). The SME’s may only get 1-10 keywords and there is little understanding of the more complex areas of targeting, quality scores etc. There needs to be a huge education to the agencies selling keywords about how to improve conversion and visibility to their clients. I suggest doing this will bring more awareness of upside and grow a real ROI approach to SEM.

Q4. What do you think need to be changed or improved in order for SEO/SEM to grow the usage and the market in China?

Stop black hat practices as it sets unreal expectations and will result in a downturn. Educate, Educate and Educate.

Q5. Should Western businesses be concerned about the censorship in developing SEO/SEM campaigns targeting Chinese market?

No. Of course there are going to be keywords that are sensitive but given their are issues around searching for them, I would not be bidding them.

Q6. In general, what are some of the challenges you face when doing business in China?

This is a very good question.  I had developed a number of companies in many regions before coming to China so expected  common issues/differences in language, business culture and business incorporation/tax setup etc.

However, the areas that has been most challenging is staffing – not simply the lack of talent but for me the lack of strong middle managers. We have found very strong executives, mostly returnees from US that have worked in US or attended grad school. These folks either come back to China and build their own start-up or become executives in established or emerging companies. The others in the team need a lot of mentoring to develop work processes and practices that are
measurable and aligned to team goals. For a successful rapidly growing company in China, personal development programs are critical.

Q7. What does make Chinese market so unique, and attractive to you?

Since I came to China almost 6 years ago, I have developed a love for the country and an appreciation for the history, culture and of course the food. It is embarrassing to say that now when I visit my home country of Australia, I find myself drawn to the China town area to ‘listen’ to chinese being spoken and get some food…although never as good as back in Beijing.

Q8. What’s the biggest myth that Western market has about Chinese search market?

Many myths…. The one I fear most is the one where Western company’s still think doing business in China is about transplanting the US or European business/marketing plan onto a local manager and expecting it to be equally effective in this market. Doing business in China (as other countries in Asia) is about localizing and adapting.