How long will Baidu maintain its hammerlock?

September 17, 2006 at 4:33 am (China, Companies, Internet)

Today’s New York Times carried a length story about Baidu, the Chinese search engine that beats Google and Yahoo in its home market. The reporter seems very passionate on Baidu, and wrote the story in a favorable tone which is rare among foreign reporters, who usually use a sarcastically style whenever talk about China. The report said Baidu “clobbered” Yahoo and Google, which is hardly seen among China. In most industries, Chinese companies usually are little brothers who are either the acquisition targets of foreign companies or negligible rivals.

I am not a Baidu fan, I also don’t agree with Baidu’s most marketing activities, especially with its gimmicks such as using nationalism to promote its brand. Anyone with common economic sense will understand that Baidu is not a national company, if we have to divide companies with stereotyped standards of national, private, or collective. Baidu is simply a U.S. listed companies and is registered off-shore. When nationalism is frequently resorted as a political tool, I really hate to see it is also maneuvered with business motivations. Baidu should use its credit, technology, and business skills to kill Google and Yahoo at home.

 

I hardly use Baidu, so am not familiar with its upsides on Chinese content search. But I’ve heard people talking about it. Also Baidu is smart to use auction to sell Ads. Chinese have complete different reactions towards Ads, and it’s very important to adapt to the local tastes. As for the technology, most people, including me, won’t bet on Baidu. The battle is not over. Given China’s nascent advertising market and internet development, it’s still too early to write lengthy paean for Baidu. Eulogy won’t be good for a young company. It’s especially true if we look at Baidu’s stocks. While it’s stock price is only about 1/5 of Google, it’s P/E is more than 3 times higher. I am not sure if Baidu’s fundamentals and China’s internet market will support such an unimaginable valuation. Well, let’s see.

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