Brand awareness
Compared with its relationship with the government, a lack of brand awareness in China is another challenge for Google.
Although Google has attracted many urban Chinese users, the search engine is not well known outside big cities in regions where Internet use is growing rapidly.
To localize its brand, Google introduced its Chinese name "Guge" three years ago. But that name was not fully embraced by the Chinese users, who struggled to pronounce and spell the name. In big cities, where many users speak English, some still call it Google. In other areas, many people call the search engine Gogo, instead.
"One of the biggest problems of Google in China is that most people don't know its brand," said Yu of Analysys International.
Google earlier this year launched an aggressive marketing campaign, posting its advertisements in bus stations and subways in Beijing, Shanghai, Guangzhou and other big cities.
The company did not have a sizable sales team in the country until last January, when John Liu was appointed to head Google China's sales operations. Google said last month that it would double the size of its sales team in China.
Innovation wins
Despite its struggles with the government and marketing challenges, experts said Google maintains an advantage in innovation over domestic rival Baidu.
Since last year, Google has been advertising the use of its Google Map service on cell phone platforms. China Mobile, the country's largest cell phone operator, last month announced plans to introduce a cell phone based on Google's Android system.
According to CNNIC, China's Internet users totaled 338 million by the first half of this year.
Mobile Internet users increased 32.1 percent in the first six months of this year to 155 million, boosted by China's launch of 3G services.
"That may help the company to win in future competition," he said about Google.
Although Google has gained market share in China in the past three years, the competition between Google and Baidu is actually in the early stages, experts said, since the focus has been on both companies eroding shares from smaller search engines such as Yahoo! and Youdao instead of from each other.
Experts said the real competition will begin when the combined market share of Baidu and Google reaches 90 percent.