China’s Baidu

Xinhuanet writes about China’s answer to Google:

When Google launched its Chinese language advertising service in February, the battle suddenly heated up as domestic search engine operators rushed to get a market share they deserve. Among domestic competitors, Robin Lee’s Baidu seems to be one of the most promising, as the firm began generating profits last year and 80 percent of the revenue came from paid listings.

Robin Li has a position that many people envy as president of, the biggest independent Internet search engine operator in China. The buzz surrounding the company comes as it plans to make an initial public offering (IPO) on the NASDAQ stock market in New York, which some analysts say will result in Baidu being worth as much as US$1 billion.

Set up in 1999 in California’s Silicon Valley, Beijing-based Baidu is China’s most popular search engine, Li said, averaging 30 million text searches a day in Chinese alone – a seventh of Google Inc’s 200 million in myriad languages. Li declined to disclose revenue, but said the number was doubling or even tripling every year. About 80 percent of turnover last year came from sponsored links, where a client pays to have its name and Web link appear at the top of a results list when particular words are searched. Baidu’s quick rise and relatively low rate of cash burn meant it has not needed more venture capital since 2000, when it raised around US$11.2 million in the United States.

However, after leading the search engine market in China for four years, Baidu began to face mounting challenges in 2003.

Domestic firm HC International, which got listed on the Hong Kong Growth Enterprise Market in December, also focuses on search technology as one of its core businesses and formed a China Search Engine Alliance with Sina and more than 100 local websites, as well as over 20 sites from leading Chinese media.

US giant Yahoo acquired 3721 Network Software Co. Ltd, which owns domestic search service provider Beijing 3721, for US$120 million. The world’s most popular search engine provider, Google, was also reported to be looking for domestic distributors.

In the face of these challenges, Li believed Baidu’s focus on a Chinese language search engine service would be its biggest advantage.

“Google provides search engine services in more than 80 languages, but Baidu only focuses on the Chinese language, so its investment on the China market is much less than ours,” he said.

He predicted in late December that China’s search engine market would reach US$50 million in 2003 and US$96-120 million this year.

Baidu gets about 80 per cent of its revenues from paid listings of more than 10,000 small and medium-sized Chinese enterprises, 10 per cent from licensing search software to enterprises, and the rest from licensing technologies to Internet portals in China.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.