Google Increases Chinese Outposts

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If Google (Nasdaq: GOOG) is going to take a bite out of Baidu.com's (Nasdaq: BIDU) search market dominance in China, it's going to do so with a little help from its friends already sitting on that side of the ocean.

Google and China.com parent CDC (Nasdaq: CHINA) are expanding last summer's partnership, providing Google's search and paid search services through more of China.com's websites.

Don't get too excited. Despite watching over a juicy domain like China.com, CDC is mostly an enterprise software specialist. In fact, its online portal and media services businesses accounted for just $2.1 million in revenues during the company's first fiscal quarter. Revenues actually fell by 30% in that segment over the past year, accounting for less than 3% of the $91.3 million in total revenue reported by CDC during the period. It's a steep cyberspace dip in a booming market that is going the other way, making this deal as important for CDC as it is for Google.

Ultimately, we're talking about one more trophy for Google's East-facing mantel. It acquired a stake in Tianya Club earlier this month to launch a pair of community-driven websites in China. It partnered with SINA (Nasdaq: SINA) to extend its paid search reach back in June. Two months before that, Google scored a minority stake in the Maxthon Web browser that has become a popular download in China.

Google's intentions are obvious. It is China's second most popular search engine, but it's a distant silver medalist. It realizes that it won't be able to gain ground on a local darling as a stand-alone outsider. Expect Google to try to nickel-and-dime its way into a more prominent position with even more deals like this in the future. After all, you can't take a bite out of the leader until you get a little closer.

However, it's not as if Baidu has been asleep at the wheel. It too has grown its offerings and inked expansive search deals with companies like MSN China, China Telecom (NYSE: CHA) and China Netcom (NYSE: CN).

It's a race that no one wants to lose. That's the kind of race worth watching.

SINA is a pick in the Stock Advisor premium research service. Baidu.com has been recommended to Rule Breakers subscribers. You can watch the race from the front row with free trial subscription offers that will take you through the month of September.

Longtime Fool contributor Rick Munarriz is a fan of China's growth story, but he does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.