Nearly one week after threatening to leave China, Google said Tuesday that its employees are back to work at its China office, denying earlier reports that it had closed its China office and its employees had been put on paid leave or transferred.

"In the past few days, we have seen loads of rumors about Google China and its employees … All these reports are untrue," said a notice posted on Google's official blog by Google executives Liu Run and Yang Wenluo.

The post said that its employees are working as usual at its China office – discuss-ing product development and interacting with clients.

"Although the management at Google headquarters announced they would be negotiating with the Chinese government over some matters in the next few weeks, Google China employees will continue to provide the best products and service as usual to our users and partners, who are vital to us," the post says.

A Google China employee confirmed details of the post.

"I have never been suspended from my work here. Some of my colleagues went to Hong Kong on business and some went on vacation. But that's quite common given this time of the year," said a manager with Google China who declined to be named.

Google announced last week that it would no longer censor search results on its website in China due to hacker attacks, and said it was considering shutting down google.cn and closing its office here.

Without directly commenting on Google's accusation, the government Tuesday reiterated last week's stance of ensuring the Internet is ruled by law.

"Foreign companies in China should abide by the country's laws and rules, respect Chinese public interests and cultural traditions, and take on corresponding social responsibility," foreign ministry spokesman Ma Zhaoxu said Tuesday. "Google is no exception."

Liu Bin, director of the World Economic Research Institute at Dalian Maritime Uni-versity, said it was naïve and irrational for Google to threaten a pullout.

"Google is like a spoiled American child. The incident shows it is too ignorant of Chinese culture," he said.

The founder and CEO of blogchina.com, Fang Xingdong, said that Google has achieved what it has originally hoped in terms of extensive media coverage.

But Google's irrational practice will hurt the company's market share and damage employee morale, he speculated.

Recent statistics from DCCI Data Center showed that in 2009, the search-engine market in China registered revenue up to 7.02 billion yuan. Of that, Baidu accounted for 63 percent and Google 31 percent.

Signs of backfiring

Google has postponed the launch of two mobile phones in China that were scheduled to hit stores today, according to Reuters.

A source familiar with the situation told Reuters that Google wanted customers to have a "positive experience" with the phones, which are based on its Android platform, but the company felt it was not the right time given the current situation in China.

Google's phones, to be carried by China's second-largest service provider, China Unicom, are meant to compete with Apple's iPhone.

The Google drama also drew the attention of headhunters.

On Monday, Guo Quqi, former Google China chief strategy officer, said on his blog that a headhunter sent a text message to him to lure him away from Google.

Google China employees reportedly began looking for work elsewhere. Employees in the R&D department told the Shanghai Morning Post that they prefer Microsoft and IBM over Baidu, given the rivalry between Google and Baidu.

Fang attributed Google's performance in China to its unsuccessful localization practice and poor management.

"Google's wide-ranging services are aimed at American consumers. The company has failed to entice its Chinese consumers," he said. "Simply converting those services into Chinese language will not help its business grow."

He suggested that Google learn from Yahoo! China and sell its Chinese arm to a local company.

Media reports indicated that Chen Yongzheng, CEO of NBA China, will take the helm of Google China to fill the vacancy left by Kai-Fu Lee.

Chen was the CEO of Microsoft Corp's Greater China business from 2003 to 2007, before resigning to lead NBA China.

"If these reports are true, I believe that Chen is an appropriate option to pull Google out of the mire," Fang said.