April 21 (Bloomberg) -- Google Inc., trailing Baidu.com Inc. in China's online search market, expects to process more local Web queries through mobile phones than computers by 2011, aided by an alliance with the nation's largest wireless carrier.

``In some quarters, our mobile traffic will double, whereas it will take perhaps a year to double on the PC side,'' Google's China President Lee Kai-Fu said in a Bloomberg Television interview broadcast today. Mobile-search volume may exceed that from computers in three years, he said.

Google, which is also developing an operating system for mobile phones, leads Beijing-based Baidu in Chinese wireless searches after gaining exclusive rights to process queries from China Mobile Ltd.'s customers. The Mountain View, California- based company earns less than half its local rival's online advertising sales from Chinese computers.

``Google has looked for newer avenues due to the strength of Baidu's position on the Internet side,'' said Jim W. Oberweis, president of Oberweis Asset Management Inc. in Lisle, Illinois, which manages $1.5 billion, including Baidu shares. ``Both Internet-based search as well as mobile search are large potential markets,'' said Oberweis.

Baidu accounted for 60 percent of China's market for search- based online advertising sales in the fourth quarter, compared with 58 percent a year earlier, according to Beijing-based Analysys International. Google's market share rose to 26 percent from 17 percent, the researcher said.

More Opportunities

``We believe the opportunities in the wireless market will increase'' after the government issues licenses for faster third- generation phone services, Baidu spokeswoman Helen Zhang said. The company said this month it would offer search services for China Netcom Group Corp., the country's second-biggest fixed-line operator.

China hasn't set a timetable for issuing licenses for 3G services, which allow services such as video-conferencing and faster Internet browsing on mobile phones. Fixed-line operators China Telecom Corp. and China Netcom said they have applied for 3G permits to enter the faster-growing wireless market.

At the end of February, China had 565.2 million mobile-phone users, more than the combined populations of the U.S. and Japan, according to data from the Ministry of Information Industry. China's Internet users totaled 210 million at the end of December, after increasing by 73 million in 2007, the government-backed China Network Information Center said.

Affordable 3G

``Looking over a three-year horizon, I know that affordable 3G will happen,'' Google's Lee said in the interview in Hainan, southern China, where he attended the Boao Forum For Asia conference. ``We find that Chinese mobile users are very cost sensitive.''

Google added mobile-phone services including billboard listings and maps in China in the past year, said Marsha Wang, a Beijing-based spokeswoman for the company.

Oberweis Asset's Oberweis said he expects Baidu to follow Google in stepping up efforts in the mobile-search market.

In January 2007, Google agreed to be the exclusive provider of search services for China Mobile's Monternet wireless portal. The Chinese company, the world's biggest phone company by users, was among carriers including NTT DoCoMo Inc. and Sprint Nextel Corp. that agreed to develop services based on Google's Android operating system for mobile phones.

China Mobile's state-owned parent this month started trials of 3G services in eight cities, including Beijing and Shanghai, that use the domestically developed time division synchronous code division multiple access technology. The new services are at a discount to China Mobile's existing 2G offerings.

Baidu's revenue more than doubled to 1.74 billion yuan ($249 million) last year on higher demand from advertisers, the company said in February.

`Good' Growth

Google saw ``market share growth and good revenue growth in China,'' Chief Executive Officer Eric Schmidt said last week, after the company reported a 30 percent jump in first-quarter profit on overseas sales.

The U.S. search company probably had sales of 501 million yuan from China last year, less than 1 percent of its total, according to estimates by Credit Suisse Group. Google doesn't break down revenue by countries.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.netStephen Engle in Beijing at sengle1@bloomberg.net

Last Updated: April 21, 2008 03:13 EDT