I’m sure most readers remember the furore that erupted when Google agreed to the censorship demands of the Chinese government when it launched its chinese portal. Their reasoning for doing so was that it was the only way they could get into China and compete in the growing Internet space there. From the market share data that is coming out of China this move has not really allowed them to take over that market, and observational evidence seems to show why.
I am in Singapore at the moment for a company training seminar with colleagues from all over Asia including quite a large Chinese contingent. Sitting at the back of the room I have had a good view of everyones laptop, and the image I keep seeing coming up all the time is

This is what gets displayed when you go to the landing page of the leading Chinese run search engine Baidu. Like Google it is more than just a search engine with other community sites and even an encyclopedia. The company started off as an MP3 search engine, predominantly focused on Chinese artists, and have grown to dominate the Chinese search and ad based search market with around 60% of the market.
My Chinese colleagues (a tech savvy and very geeky crowd) have been occasionally using Google as well, so I had a chat with some of them over drinks last night on what determines which they use. The feeling was that Baidu was simply a better search engine when they wanted to search for something in Mandarin (and in Cantonese as well according to the HK boys) it just understands their search terms better. If they are searching for a term in English though, or some things like image search, Google works better so they use that.
DIfferent languages don’t just have different words, they often have vastly different grammer and sentence structure, I would presume that the issue Google is having is that they are not capturing some of the nuances of the language giving poorer results. The difference in market share is probably partially due to this.