It’s Baidu’s Fight to Lose in World of China Search

From the Wall Street Journal:

Google, Baidu’s closest rival in the Chinese search-engine market, may not have much more of a future in China. That could well leave Baidu, already with a roughly 60% market share, even more comfortably ahead of the rest of the competition. It is certainly turning its leading position to advantage now. Last year’s earnings were a 42% improvement over 2008, it said Wednesday, while its fourth-quarter performance beat expectations.

But Baidu also has had some setbacks of its own. One market in which it is struggling is e-commerce. Youa, its consumer-to-consumer site, has gained little traction in an area now dominated by Taobao, a part of the Alibaba empire, which has cornered more than 80% of the market.

This could prove more of an Achilles heel for Baidu in the years to come. Credit Suisse expects China’s e-commerce market to expand rapidly, with a compound annual growth rate of 54% out to 2012 from 2009. As the market grows, there is the potential for companies to spend more of their advertising budgets on sites like Taobao, which get traffic from consumers flashing their cash, compared to more general search engines such as Baidu.

February 11, 2010 10:58 AM
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Categories: Economy, Main, Society