Google just made its first-ever direct investment in a Chinese startup

When Google calls, pick up the phone.
When Google calls, pick up the phone.
Image: Reuters/Kim Kyung Hoon
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Google has historically had a testy relationship with China, but tensions look to be easing. The latest sign of reconciliation: the search giant’s first-ever direct investment in a Chinese startup.

Mobvoi, which jointly announced the investment today (Oct. 20) with Google, is a Beijing-based startup founded by former Google employees Zhifei Li and Mike Lei. The company makes a Google Now-esque search service called Chumenwenwen, which lets users ask for directions or order food, for example. It also powers voice search for the Moto 360 in China, the first Android Wear device to hit Chinese shores.

The size of the investment was not disclosed, but Google has confirmed that it’s for a minority stake.

It’s a small but significant step for Google back into China. After shuttering its search engine in China in 2010, the government has also kept Google’s other services like Gmail and Youtube inaccessible. The company continues to house offices in Beijing and Shanghai, where it sells ads to Chinese companies looking to reach overseas customers. But its consumer-facing business in China is basically nil beyond Android, which comes installed on about 80% of smartphones in the country.

Within the past year, multiple reports have surfaced that Google intends to re-enter China by launching an app store. The investment in Mobvoi indicates that it might also try to reach Chinese consumers with AI and voice search—which would pit it directly against Baidu, the dominant search engine in China.

While Google Venture has made deals in China before, this is the first investment made by Google proper. In general, US tech giants Google, Amazon, and Facebook have refrained from targeting Chinese companies. Prior to Mobvoi’s funding, only Amazon has invested in a Chinese startup, putting an undisclosed sum in a little-known grocery delivery startup last year. Meanwhile, Baidu, Alibaba, and Tencent—China’s trifecta for internet business in search, e-commerce, and social, respectively—have each been funneling money into foreign startups over the past two years.