This is not very good news for Google. After creating a very compelling and affordable tablet that sells for only $200, which could easily become a best seller in China, where people are a lot more price-sensitive, Google finds itself being denied access to the Chinese market with the Nexus 7.

It seems the Chinese Government hasn’t forgotten how Google wanted to leave the country in 2010 because they refused to censor the type of things the Government wanted them to censor. That was a very admirable thing Google did back then, but it obviously wasn’t very pragmatic.

When you plan on turning on a country’s Government like this, first make sure that you are not the only one doing it, especially if we’re talking about a huge country that you want to be in for the next few decades or so. If say 20 huge tech companies would’ve joined together to protest the censorship and restrictions that China imposed, then they might’ve had a chance in changing the Government’s mind. But they went against it alone, while other companies like Microsoft had no problem obeying the local censorship rules.

The China government’s negative attitude is interpreted as a response to Google’s announcement of withdrawing from the China market in March 2010, the sources pointed out. It is difficult for the Nexus 7 to enter the China market, even through sale of Asustek’s marketing network there, the sources indicated.

The Chinese Government would also like to give preference to its own white-label companies, and give them the opportunity to establish themselves as strong brands and sellers before someone like Google and Asus enter the market with the Nexus 7, even though those companies are using Google’s own software, Android. It doesn’t sound exactly fair, but short of a massive protest from all Android manufacturers, what can Google do?

Without the China market, the cumulative global sales volume of Nexus 7 will reach an estimated 3.5 million units at the end of 2012, the sources noted.

Although Google has been expecting to sell 8 million Nexus 7 units by the end of the year, it seems those numbers took into account selling the tablet in China too. Now those plans may be ruined unless Google finds a way to get out of this situation soon. Otherwise, it looks like the Nexus 7 may only be selling 3.5 million units by the end of the year, which is a respectable amount, although it’s no blockbuster.