A Google spinoff is driving into China.

Waymo, a company born from Google’s self-driving car project, has set up a subsidiary in Shanghai’s free-trade zone, according to official filings. The business, called Huimo Business Consulting (Shanghai) Co. Ltd., will cover design and testing of autonomous car parts and products, as well as various consulting services. Kevin Vosen, Waymo’s general counsel, is listed as legal representative.

Cars in Waymo’s operations center in Chandler, Arizona. (Picture: Google)

The move places Waymo right in the center of a heated race in China, where tech titans like Baidu, Alibaba and Tencent are competing with young startups to put driverless cars on the road. But Waymo already has a comfortable lead: Navigant Research’s latest self-driving scorecard puts it at second in the world, while no Chinese firms made even the top ten.

Still, there are reasons why it might want to bring its tech to China.

In the last year or so, China has made a major push into autonomous cars, according to the China Internet Report 2018. The country declared smart cars a national priority and issued nationwide guidelines for self-driving vehicles -- giving local authorities a freer hand to approve road tests. Beijing, Shanghai and Shenzhen, among others, have all taken advantage of the new rules.

Meanwhile in the US, legislative efforts to speed up the testing of driverless cars have run into a number of roadblocks. Despite protests from automakers, a bill that would give these vehicles an exemption from old safety rules has stalled -- as deadly accidents bolstered safety concerns.

Perceptions among ordinary people also vary between the countries.

A survey conducted by Ford last year showed people in China were more enthusiastic about the future of driverless cars than Americans. A company manager said it might have to do with how densely populated a country is: The more crowded a place is, the longer the daily commutes are -- which may affect how much a person looks forward to traffic innovation.

Then there’s the money.

A McKinsey study released in April says China will likely become the world’s biggest market for autonomous vehicles by 2030, with 8 million driverless cars on the road. But there’s one caveat: The technology needs to be ready. And some experts have expressed reservations. More than a third of those surveyed believe safety issues won’t be solved until after 2030.

At home, Waymo could soon find out whether its technology is good enough for the real world. It’s now readying its first commercial autonomous taxis for launch later this year in Phoenix. But even if it goes well, scaling the service to other cities or countries could present a whole new set of challenges.

Take the example of Pony.ai. When the Chinese startup moved its headquarters from Silicon Valley to China’s Guangdong province, it had to deal with very different road conditions.

“Coping with the rain is one challenge as it’s always sunny in California,” founder James Peng told the South China Morning Post. “There are other issues such as jaywalking or drivers using the wrong lane.”

But technological challenges are unlikely to stop Waymo -- or its sister company -- from wanting a piece of China’s lucrative market. Just this month, it was revealed that Google, which pulled its search engine from China in 2010, has been working to launch a censored search app exclusive to the country.