Google Inc’s departing head of China operations, Lee Kai-fu (李開復), will run a US$115 million fund that invests in Chinese technology startups after he leaves the world’s biggest Internet-search company.
WI Harper Group will be the lead investor in Innovation Works (創新工場), the fund headed by Lee, a statement yesterday said.
Other investors include YouTube co-founder Steve Chen (陳士駿), Foxconn Technology Group (富士康), Legend Group (聯想) and New Oriental Education & Technology Group (新東方教育科技集團), the statement said.
PHOTO: BLOOMBERG
Google faces the challenge of building on Lee’s progress in almost doubling the Mountain View, California-based company’s market share in China and narrowing Beijing-based Baidu Inc’s (百度) lead in the world’s largest Internet market by users.
The departure also highlights the difficulty for global technology companies in retaining personnel in a country that ranks first globally in online censorship.
“In our view, Mr. Lee’s departure and the ensuing management transition may create near-term challenges for Google and thus indirectly benefit Baidu,” Morgan Stanley analysts led by Richard Ji wrote in a note to clients last week on the day Google announced Lee’s resignation.
Google rose US$3.78 to US$461.30 in NASDAQ Stock Market trading on Friday, extending the stock’s gain this year to 50 percent.
DEFECTION
Google hired Lee in July 2005 from Microsoft Corp, prompting the world’s biggest software maker to sue by accusing Lee, 47, of violating an agreement to shun competitors for a year. The sides reached a settlement in December of that year.
Lee wasn’t the first executive Microsoft lost in the country. Since 2002, top executives in China at the Redmond, Washington-based software maker have left for Chinese online-game company Shanda Interactive Entertainment Ltd (盛大), the National Basketball Association and News Corp’s Star Group.
The US search engine’s share of the Chinese market rose to 27.8 percent last year from 16.1 percent in 2006, Beijing-based researcher Analysys International said.
Baidu’s share grew to 62.2 percent from 53.3 percent, the researcher said.
Lee’s tenure at Google included the launch of the company’s Chinese Web site, Google.cn, which omits links to online content censored by China’s government.
He also oversaw the setup and expansion of Google’s Beijing development center, where chief executive officer Eric Schmidt said the search company would eventually have “thousands of people.”
GOVERNMENT SCRUTINY
Google has also been subject to Chinese government scrutiny under Lee.
In June, Google suspended its “Suggest” search prompt feature on its Chinese site after the local-language service was criticized by the government for providing links to pornographic material.
China adopted “punitive measures” against the company’s international site, Chinese Foreign Ministry spokesman Qin Gang (秦剛) said on June 25, as the service became inaccessible to Chinese Web users for hours.
Google’s YouTube site was among 77 international Web sites that were inaccessible in the past week in China — more than any other country, says Harvard University’s Berkman Center for Internet & Society’s Herdict.org site, which monitors reports of Web outages.
INTERNET USERS
China added 40 million Internet users in the first half for a total of 338 million at the end of June, the China Internet Network Information Center said.
That’s more than the total population of the US.
Lee was born in Taiwan and raised in Tennessee. He is a former assistant professor of computer science at Carnegie Mellon University in Pittsburgh and worked for Microsoft for five years.
WI Harper manages more than US$400 million in investments through its offices in Beijing, Taipei and San Francisco.
It specializes in investments in early and expansion-stage companies with operations in China.
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