Ever since the beginning of the year, Google (NASDAQ: GOOG) has been getting batted around in China. After accusing the Chinese government of attempting to gain access to some users’ e-mail accounts, Google automatically re-directed its google.cn servers to the company’s Hong Kong servers. Then the government threatened to cancel Google’s license to operate in China, so the company had to put in place a re-direct that sent users to a landing page in China where they could then select the Hong Kong servers.

While all this was happening, Google was losing market share to China’s home-grown search engine Baidu (NASDAQ: BIDU). And new competitors are appearing in the search market. Alibaba.com, China’s largest e-commerce site, is about to launch a search engine called Etao. Yahoo (NASDAQ: YHOO) owns about 40% of Alibaba, and the search engine is powered by Microsoft’s (NASDAQ: MSFT) Bing. And then there’s the joint venture between China’s largest mobile phone operator, China Mobile (NYSE: CHL), and the government news agency Xinhua to launch another search engine.

Google did not solve all its problems with China by re-directing traffic to its servers in Hong Kong. The company plans to cancel contracts with seven advertising resellers on the mainland beginning next week.

According to China Daily, the resellers are seeking compensation from Google for the canceled contracts. The seven signed two-year deals last December, and have threatened to take legal action if Google doesn’t pay them off.

The resellers charge that some Google employees in China “were involved with bribes and corruption.” A Google spokeswoman in China did not specify the reason for firing the resellers, but did say there were a “variety of reasons” for ending the relationship. She also noted that Google hopes  to find new resellers.

Estimates of how much ad resellers contribute to Google’s revenue in China range from 20% to 40% of about $500 million in total revenue. That points up Google’s other problem in China — falling market share.

Google now claims around 24% of the Chinese search market, compared with around 70% for Baidu. In the first quarter of 2010, Google claimed around 30% of the search market to Baidu’s roughly 64%.

Google is unlikely to give up on China entirely because the potential there is so vast. But it’s doubtful that the company will ever play a major role in China’s search market.