Web services leader Google Inc. has won a license to operate in China and has bought a Web address as it battles Yahoo Inc. in the world’s second-largest Internet market.

The U.S. Web services giant, which makes its money from searches, advertising and other services, is hiring staff with the aim of opening an office in the country this year, according to several sources within or close to the company.

A person familiar with the matter told Reuters the company was planning to open an office by the end of this year, most likely in Shanghai, and was building up a country team to target corporate customers for advertising sales.

A Google spokeswoman had no comment on those matters.

China claims the world’s second-largest number of Internet users after the United States and had 94 million Web surfers at the end of last year. The figure is expected to grow to 134 million by the end of 2005, according to official data.

But major players must cope with rampant censorship in China. Most firms voluntarily block searches on sensitive topics from the Falun Gong spiritual movement to the June 4, 1989, crackdown on pro-democracy protesters in Tiananmen Square.

Google itself fell victim to a periodic blocking of some Web sites in 2002, when people who tried to access the Chinese language site were routed to an array of other similar sites.

“Google is interested in China and we are working to learn more about this important market,” the spokeswoman said in a statement sent to Reuters, the company’s first public comments about its China plans.

“As part of our studying and learning about this market, we have obtained a license for a rep office, but have no employees in China at this time.”

Google currently has two job vacancies posted under the China section of its Web site, including a marketing communications manager and a marketing director.

Google last year purchased a small stake in China’s leading search engine, Baidu.com, which is now in the process of pursuing an overseas listing. Google has not commented on the strategy behind the purchase.

By Doug Young

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