It seems that the Chinese government is being a bit petty and anti-competitive. The new Google Nexus 7 tablet was denied from entering the Chinese market. Apparently, the Chinese government holds grudges and has a long memory. Back in 2010, Google refused to make the censorship changes to their services that the Chinese government wanted to impose in order for Google to stay in the country. Google chose the more difficult high ground by sticking to their principles on censorship, while other companies (like Microsoft) compromised their integrity in order to play in the Chinese sand box. It looks like Google's position is causing them some difficulty now.
Additionally, it appears that the Chinese government likely has another ulterior motive for keeping the Google Nexus 7 out. It basically amounts to preferential treatment for its own companies. It will allow white-box Chinese companies to have less competitive pressure from the big-name player that Google would be in the market. Google was planning to sell over 7 Million units of Nexus 7 tablets this year, but some of that was supposed to be in the Chinese market. Unfortunately, this will put a dent in those plans. Just how much is yet to be determined.
Source: NexusTablets.net via DigiTimes