You know that Baidu (NASDAQ:BIDU) has it made in China when even Google's (NASDAQ:GOOG) chief in the world's most populous nation throws in the towel.

Kai-Fu Lee, the president of Google's China operations, is stepping down. His duties will be divvied up between two existing executives.

The move is significant, especially given all that Google went through just to get him. You may remember the legal squabble between Google and Microsoft (NASDAQ:MSFT) four years ago, when Mr. Softy tried to block his arrival at Big G.

Lee was Microsoft's head of research and development in Beijing when he chose to take a sabbatical. Google jumped in -- impressed by his mastery of search-engine technology and language recognition -- and tapped Lee to head up its efforts in China. Microsoft invoked the no-compete clause in Lee's contract to block the move, and legal fisticuffs ensued.

Lee was allowed limited functionality at Google for a few months, before being cleared to truly head up Google China in 2006.

How did he do? Well, no one disputes Google's position as the second-largest search player in China. The problem is that Google is a distant silver medalist, with Baidu's market share growing over the past few years.

Google clearly has the resources to matter in China, but the locals always find themselves gravitating back to the national hero in Baidu.

No one is calling Google a slouch. It's more popular in China than are homegrown engines such as Sohu.com's (NASDAQ:SOHU) Sogou. However, Lee's decision to roll with his own venture is probably telling in analyzing the Chinese government's critical vigilance of foreign entities.

It doesn't matter how Google chooses to spin this. The Baidu boardroom has to be giddy. It's in the driver's seat in a booming country where the Internet revolution is just getting started.

If you were Google, what would you do to catch up to Baidu? Is it even possible? Let us know your thoughts in the comment box below.

Baidu, Sohu, and Google are Motley Fool Rule Breakers picks. Microsoft is a Motley Fool Inside Value selection. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has been a fan of China's growth stocks for several years now, even though he owns no shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.