NY Times profile of Baidu, China's main search engine and currently the 4th biggest website in the world. It has a market value of $3 billion, but "some analysts" question whether Baidu can keep out competition from Google and Yahoo:Interesting
"While Baidu continues to gain market share in China — and does so with a Web site that the Chinese government heavily censors and that gives priority to advertising rather than relevant search results — some analysts question whether Baidu can withstand competition from Google and Yahoo, which possess superior technology and global work forces."
I actually think the question is the wrong way round - it should be: can Google and Yahoo withstand competition from Baidu, in China?
While I'm not able to judge whether Baidu's technology is inferior to Google and Yahoo's - although I'd love some comments on this from techies who are familiar with Baidu - I think Western companies (even Google) will be hard-pressed to compete against Baidu in China. In our Top Web Apps in China post, we noted that government regulations, language and cultural barriers are all difficult for western companies to overcome. While there continues to be a lot of hype about China being the next big market for Silicon Valley companies to conquer, the reality may be completely different.
Does US have a lock on innovation?
And who's to say Google's technology is better? Netanel Jacobsson is one person who should know - he runs the up and coming browser Maxthon from China. In a recent post Netanel commented on whether America still has a lock on innovation. In short he doesn't think so and indeed had this to say:
"China should not be seen as a copy cat - but a great force on future innovation. Between 2004-05 there was an increase in close to 40 % in filed patents from China."
Baidu gaining market share, while Google struggles
Also, regarding Baidu in particular, China Web2.0 Review noted recently that Baidu gained market share last year and strengthened its leadership in China’s search market. Meanwhile Google China lost a significant amount of market share:
"According to CNNIC report, 62.1% users choose Baidu as their preferred search engine, representing an increase of 10 percentage in one year, while Google China’s market share decreased 8 percentage to 25.3%. In Mr. Lv’s research, Baidu gained 13% market share in last year, almost two third users use Baidu as their first choice, during the same period, Google China lost about 12% shares."
Why the market share slump for Google in China? According to Tangos Chan, who is the publisher of China Web 2.0 review, "Google China did not think locally."
This theme that localization matters has come through very strongly in our series of posts on international web markets. Perhaps it even matters more than the technology.