I believe them that space was the problem in Hong Kong. Expensive real estate there. My understanding is that the Chinese government does not meddle too much in the affairs of Hong Kong like they do on the Mainland.
That being said, I have a client that is trying to do business in China, and I can confirm that the Chinese government is a total pain in the ass about this. I'm not involved in the details, but basically, you need an e-commerce license that is insanely expensive to sell anything in the Chinese market, and it just wasn't worth it to them. The client has a presence in every other Southeast Asian country.
I imagine that the situation for Google is different, but anyway, I just thought I'd share for no reason since it's irrelevant to Hong Kong.