Wan+Y.+strategy+report

Wan Y.

TO: Proximity Social Networking Team FROM: Yichi Wan DATE: February 22, 2010 SUBJECT: Baidu strategy analysis

Here is my Baidu strategy analysis. Baidu is the favorite social networking search engine in China, and it controls 63.9% of China's social networking search engine (Digital East Asia; 2010). Baidu has been adopted by Gen- Y users as their first and primary source for social networking search engine because Baidu uses Chinese characters.

Baidu provides search results for websites (740 million web pages), audio files (10 million), and images (80 million). Baidu offers 57 searches and community services including Baidu Baike, an online collaboratively-built encyclopedia based on key word search (Wikipedia).
 * Profile**

Baidu was founded on January 18, 2000 by Hongyan, Li. Unlike other social networking websites, it uses unique Chinese characters. The name is from a poem that was written more than 800 years ago during the Song Dynasty. The literal meaning of "Baidu" is, "hundreds of times," representing the persistent search for the ideals. Li chose a poetic Chinese name because he wants the world to remember its heritage.

Baidu's main revenues are from two sources:
 * Online marketing and other services
 * Consumers who subscribe to Baidu's Ads Service

In 2009, Baidu's revenue was $651.6 million, while its net income increased 41.7% from the year before to $217.6 million. Financial analysts expect the revenue for 2010 to be another 48-52% increase from the year before (Wikinvest). In addition, Baidu's main rival, Google, indicated it might end its operations in China, which would help Baidu to grip on the Chinese search market.

Although Baidu is the dominant social networking website in China; it is threatened by international search giants like Google and Yahoo, as well as Chinese competition from Sina, Sohu.com. Google and Yahoo. Google landed in China in 2005, when it agreed to abide by the Chinese “Golden Shield Project” which prevents Chinese access to some controversial web sites located outside of China (Wikipedia).
 * Competitive landscape**

Overall, Baidu controls the dominant social networking search engine in China. Baidu's main advantage is that it has the links to many free social networking websites, videos, and audios. Surprisingly, Yahoo is the search leader in both Hong Kong and Taiwan, but not in mainland of China (Digital East Asia; 2010).

Baidu uses different kinds of new products to attract additional customers and to retain the old users. In addition, Baidu continuously upgrades its technology to support increased traffic and expands services to maintain its customer loyalty. Since the majority users of Baidu are Chinese, Baidu's strategy is to keep its dominant position in China. Furthermore, Baidu seek s to expand other new markets in Asian countries, such as Baidu Japan which is now a foothold of Baidu in Asian. Also, as 3G services and Smartphone popularly spread in China, Baidu has developed a various services to the Chinese mobile search market (CNNMoney.com).
 * Baidu's Strategy**

The typical member of Gen- Y in China was born in a particularly prosperous period when families were allowed only one child. Chinese Gen Y users can then get most of what they want. They have learned to use and enjoy the internet very well, and most of them are very skilled of using the internet to communicate with each other. Baidu keeps its dominant position in use and understanding of the Chinese language and different dialects. It provides the Chinese Gen- Y users a new way to know and to learn the world outside of China. I think Baidu should keep looking for new markets and making its webs interface compatible with 3G, Smartphones, and in various new services in the future.
 * Gen- Y implication**


 * Reference**

Herman, Doug, " Baidu, Google, Yahoo and Bing: 2009 Was A Battleground In Chinese Search", Digital East Asia. Retrieved February 23, 2009 from [] Wikipedia, searching for " Baidu", Retrieved February 26, 2009 from [] Wikinvest, Baidu.com (BIDU), Retrieved February 27, 2010 from [] Baidu, Inc. (BIDU) (2010), Analyst Opinion. Retrieved February 27, 2010 from [] Stephanie N. Mehta, Google v. Baidu: Which company will win China, Retrieved February 28, 2010 from [] Wikipedia, searching for " Google China", Retrieved February 28. 2010 from []