Google, Inc. (NASDAQ: GOOG) continues to dial up its efforts in the Chinese market. Having increased its position against the country's leading search engine, Baidu (NASDAQ: BIDU), it is now looking to rapidly expand its presence in China's social networking community. Although Google's efforts in social networking really have not paid off in the U.S., that's not the story in China.

Part reality and part competitive trap (perhaps), Google is making the world think that social networking is ripe for expansion in China. At the same time, China's government wants to ensure all these communications are kept under control (it's a communist country, right?), which would make one think this: how on earth can any company bring social networking to a market ruled by an iron fist when it comes to communications?

Kai Fu-Lee, the former Microsoft Corp. (NASDAQ: MSFT) employee who defected to Google recently under intense scrutiny, indicates that the typical Chinese internet user is 25 years old -- making the market perfect for increasing market awareness and share of social networking efforts. But Baidu may be used more often by kids looking for pirated audio and video content more than anything else -- not for "talking and socializing with friends" as social networking is typically described. Is Google really wanting a piece of that, or is it trying to torpedo competitors? Hey, the world's largest internet search company did not arrive where it is today by being stupid.

Since the literal translation of Google (NASDAQ:GOOG) into Chinese is "old hound", its decision to find a new name for this market seemed reasonable. When it decided to adopt the name Guge in China, it intended the name to translate as "harvest songs," to suggest a "sense of a fruitful and productive search experience, in a poetic Chinese way." Instead, it has translated as a lawsuit for tradename infringment.

The company filing the suit in Chinese court is Beijing Guge Sci-Tech, a name it registered in April of 2006, according to the Wall Street Journal. Google registered the name Guge six months later. However, Google claims its choice for moniker of its Chinese operations was openly rumored before Sci-Tech's registration, perhaps implying Sci-Tech is engaging in a bit of tradename squatting.

With China's inclusion in the World Trade Organization, the country has taken serious measures to allow trademark and tradename protection, which might help Google's case. However, the Chinese government has seemed to favor Google's competitor Baidu, which dominates the Chinese search market, and this preference may work against a quick and positive resolution for Google.

With Google caving recently (and then  slowly reversing itself) and agreeing to censor certain word-based search results with search queries that originate on China, is Google's methodology working? Judging from this blog post, I'd say the methods are working, albeit inconclusively. With this 10,000-word test, 9% of the search results from this word search test provided censored search results. That's 901 word searches out of 10,000 words tested.

What does this all mean? Not sure -- words can be combined into so many different phrases and phonetic variations that censoring all these possibilities is probably impossible, even for a brainiac-powered company like Google. And, with Google co-founder Sergey Brin recently stating that Google "had done evil in China", perhaps Google is planning to not even make www.google.cn (the search leader's Chinese site) available in any longer.

What this means -- possibly -- for GOOG investors is that Google, by sticking to its guns and corporate philosophy, may be missing a lucrative piece of an incredibly-expanding market in China. Google has an very large office there staffed by quite a few people, but it's strategy in China is a little muddy at the moment. Is it going to or not going to provide search capability in China in the native Chinese languages (traditional and simplified)?

With Sergey Brin transversing to Washington this week to meet with lawmakers (and apparently their stuffed-shirt attitudes) on net neutrality, he's also in the hot seat for referencing that Google should not have censored its results on its Chinese search site -- and that Google may just leave China altogether. While this seems like a far-fetched statement -- with China being the fastest-growth internet country on the planet -- it does harken back to Google "doing no evil". China's repressive communist regime and inexcusable human rights travesties make it a target for many critics, yet more U.S companies have set up shop there for the incredible cost savings. These companies apparently don't mind "doing a little evil" if it translates into profits for shareholders, right?

Well, Google may be in the decision mode to exit China completely, insofar as its China domain (www.google.cn), leaving its worldly Google domain (www.google.com) intact, although the Chinese government would sure block all remaining access to the local domain as well. This is quite a reversal from Google's earlier stance, and regarding the "right thing to do" for civilization and to fall inline with Google's mantra of "do no evil" this is, strangely, a welcome admission from the Google folks.

Perhaps drive further into the heart of the Chinese search market by making acquisitions? Google, which has a very hearty pile of cash at its disposal, appears to be making China a major market focus recently. Yet, it does not have the top spot in that market for its bread-n-butter offering, internet search. What to do?

In this Reuters story, Google CEO Eric Schmidt sees 100 Google engineers in China by mid-2006. In addition to that, don't count out Google to make some hard acquisitions from the home Chinese market to bolster and grow its presence there. It's a pretty safe bet based on the explosive growth the Chinese market has seen and will continue to see.

Not only has Google had to defend itself in China recently from attacks that it turned over user information to the Chinese government (or risk losing the Chinese market completely), Google has turned over a new leaf name - they will be called Gu Ge in China - the first time Google has actually changed their name to suit a particular market. Gu Ge, which means "song of the harvest of grain" (um, what?) will try to capture more of the Chinese search market - where it doesn't have a built-in lead, surprisingly.