Baidu: China's Leading Search Engine

Case Code: BSTR293 Case Length: 19 Pages Period: 2002-2008 Pub Date: 2008 Teaching Note: Not Available

Price: Rs.300 Organization: Baidu.com, Inc. Industry: Internet and E-Commerce Countries: China Themes: Innovation, Growth Strategy, Emerging Markets

Abstract Case Intro 1 Case Intro 2 Excerpts

"We believe in local markets; we believe that the search engine is not a pure technology phenomenon, but has close ties with culture and language. We understand the Chinese language and culture better, therefore can deliver the best user experience for Chinese users. If we ever get into other markets, we will run a very local team with local servers too. This is our true differentiator in China."

- Robin Yanhong Li, Chairman and CEO of Baidu.com, Inc., in 2004.

"Baidu's local know-how and attentive customer service create barriers for its competitors. We feel that Baidu was able to extend its lead over its peers by leveraging its strong sales support to advertisers and/or agencies. This customer-centric strategy enables advertisers to get greater control of their marketing programs, thus creating demand for Baidu's services over its competitors."

- James Lee, Analyst, WR Hambrecht , in 2006.

"Baidu has established a relatively narrow economic moat around its brand that could eventually be eroded."

- Haibo Zhang, Research Analyst at Morningstar, Inc. , in 2006.

China's Google?

On April 24, 2008, China-based Baidu.com, Inc. (Baidu) the leading Chinese language Internet search engine, announced its financial results for the first quarter ended March 31, 2008. Its total revenue for the quarter was RMB 574.4 million (US $81.9 million) , an increase of 108.4% over that of the first quarter of 2007. Operating profit was recorded at RMB 147.4 million, and it grew by 99.6% over that of the corresponding period of the previous year (Refer to Table I for the key financials of Baidu for the first quarter of 2008 and the first quarter of 2007).

Analysts were of the view that the financial statistics had once again proved Baidu's position as a market leader in the Internet search market in China. After releasing the financial results, Robin Yanhong Li7 (Li), Chairman and CEO, Baidu, said, "This was another excellent quarter for Baidu. Our revenue growth remained strong and is an indication of our ability to execute our strategy of providing the best possible user experience and service to our customers."

Table I
Key Financials of Baidu

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