On December 10, Google announced that it is scrapping plans to build a data center in Hong Kong. Instead, it will double its planned investment in its Taiwan data center to $600 million. This undoubtedly worsens the already grave situation for about 32,000 Google Apps users in mainland China, as Google never officially launched Google Enterprise solutions for customers there.

Google Apps for Business users in mainland China have long faced challenges connecting to Gmail, Google Drive, and Google Sites. Previously, I predicted that Google would improve its relationship with the Chinese government and offer Google Enterprise (including Google Apps) from its new Hong Kong data center in 2014, improving customers’ access to the service. However, this week’s news has killed any hope of that happening.

This has a few implications for customers in mainland China and Hong Kong:

  • Uncertainty around Google’s Enterprise Business and Google Apps strategy will kill new business.When you don’t understand a vendor’s local sales and support strategy, you’re not likely to include it on your shortlist. Google faces losing new business from companies based in mainland China and Hong Kong companies with a mainland presence.
  • Enterprises planning to adopt cloud-based email and collaboration suites will look elsewhere.Google Apps isn’t the only suite option. Microsoft now offers Office 365 services in mainland China via a local data center in Shanghai. And local Chinese vendors like Tencent, Sina, and 163 provide more competitively priced hosted services.
  • Existing customers face challenges in keeping Google Apps for the medium to long term.Social media is full of Chinese Google Apps users complaining about their connection problems. If resellers provide services to help companies migrate away from Google Apps, they will think about alternatives when formulating their future plans.

What should I&O professionals in mainland China who already use Google Apps and suffer from connection issues do? Those who choose to continue using the service can do a couple of things to help:

  • Expand the network configuration. VPN connections, SSH tunneling, proxy servers, and other networking protocols and technologies can help ensure ongoing access to your Google Apps from behind restrictive firewalls.Companies can buy these services bundled with Google Apps as a solution for branches in mainland China. Many Google Apps resellers — such as Hong Kong reseller Master Concept — can also provide VPN services in mainland China.
  • Encourage employees to use mobile devices. As the Chinese government has not blocked the Google exchange server, accessing Google Apps accounts from a mobile device works better than via a web browser on a PC.

I regularly track Google Enterprise’s business in Greater China as well as alternative solutions for enterprises. If you have further questions or would like to initiate a conversation, please feel free to reach out to me at fliu@forrester.com.