Baidu: Ruling China

Baidu: Ruling online China

Of course Google's clash with the Chinese government over censorship, their redirection of Chinese users to the uncensored pages Google Hong Kong service and their sub-sequence withdrawal from Beijing may have been a factor, but Chinese Internet search engine Baidu is expected to see a 45 percent growth in 2010.

Last year, Baidu Inc.and Google Inc. held 96.2 percent of the Chinese search engine market's overall operating revenues. The two companies made up 94.9 percent of the market's total webpage search requests then, but since Google's withdrawal from China... Baidu now rules the roost, however other search engines are realising there is a hole to be filled.

Shares in the Beijing-based, Chinese-language search engine's Nasdaq jumped by 54 percent in January when Google announced it would stop censoring search results in China. With Google now out of China, it has continued to do well.

However it is Baidu that is doing the most well, sustaining its growth momentum following Google's departure. Of course Baidu now has a near-monopoly in China, with the rest of its competitors fighting over a mere one percent market share.

As such, Baidu now dominates the Chinese language search market and with such power comes heavy investment and profit.

Online expenditure

Spending on online advertising totalled US$1 billion last year, but this is expected to raise to US$4.9 billion over the next five years. Unless a major competitor steps up, all of this will belong to Baidu.

Speaking to BusinessWeek.com, Arlene Ang, Singapore-based regional managing director with Publicis Modem, the digital arm of Publicis Advertising pondered, "I just don't see who else is big enough to take over that spot. There are smaller ones but they don't have the reach."

This seems to be the general consensus but some don't appear to be so sure.

Chris Reitermann, president in Beijing of Ogilvy One, the digital arm of Ogilvy & Mather believes that not everyone will want to put all of their online budget into one company and will instead diversify.

"You will see one of the other search engines over time definitely become more prominent and take part of Google's revenue," he said.

CLSA's Hong Kong-based analyst Elinor Leung concurs saying, "This is an opportunity for everybody to ramp up their market share so everyone will try."

So could we see a potential rival to Baidu rise over the past few years? A Yahoo to Baidu's Google? Only time for tell, but for now Baidu seems to have the web all wrapped up.

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Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

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