Baidu versus Google

Snippets from New York Times’ David Barboza article, courtesy of The Ledger Online:

Today, Baidu has a market value of $3 billion and operates the fourth-most trafficked Web site in the world. And Baidu is doing what no other Internet company has been able to do: clobbering Google and Yahoo in its home market.

But Baidus evolution, and Mr. Lis journey as an entrepreneur, offer textbook examples of the payoffs and perils of doing business in China and suggest that Baidu may prove to be far more resilient than some analysts believe. China has a population of 1.3 billion, about 130 million of whom are Internet users, an online market second in size only to the American market. Because China is the worlds fastest-growing major economy, analysts consider it the next great Internet battleground, with Baidu uniquely positioned to prosper from that competition.In exchange for letting censors oversee its Web site, Baidu has sealed its dominance with support from the Chinese government, which regularly blocks Google here and imposes strict rules and censorship on other foreign Internet companies.

In addition, analysts say, entrepreneurs in China have a knack for pummeling American Internet giants. The globally dominant U.S. Internet companies have failed to take the No. 1 market share position in any category, says Jason D. Brueschke, a Citigroup analyst, of the Chinese market. And they came with more money and major brand names. And so theres something fundamentally different about this market.

So fundamentally different, Mr. Brueschke believes, that Baidu will retain its hammerlock on the Chinese search industry. The real battle in the competitive landscape is not about whos No. 1, its about whos going to be No. 2, he says.Google, of course, will have none of this, stressing the independence of its search results and the international reach it offers users. People want information and they want global information, says Kaifu Lee, the president of Google in China. We cant be bought.

But the Chinese market is littered with the wreckage of American Internet companies that have failed to dominate here. In 2003, eBay bought the largest Chinese auction company and then lost market share. In 2004, Amazon bought the largest Chinese online merchandiser and then lost market share.Now, the real fight begins. Google, which invested $5 million in Baidu just before its public offering last year, sold that stake for a hefty $60 million in June. And now, Google is building up a huge research team in Beijing, not far from Baidus headquarters. But analysts say it wont be easy for Google. (LP’s italics)

Hmmm. China. My next playing field, methinks. Or should it be Korea? Not sure.

Technorati Tags Online Communities, Baidu, Google, China, search, Jason D. Brueschke