With Google Gone, Baidu Rules China |
| BusinessWeek - Mar 24, 2010 |
Google's (GOOG) confrontation with the Chinese government has been very good for investors in local rival Baidu.com (BIDU) The Beijing-based, Chinese-language search engine's Nasdaq shares have jumped 54% since Jan. 12, when Google first announced that it intended to stop censoring search results in China. With Google now following through on its threat and redirecting traffic to its Google Hong Kong service, where it doesn't need to censor its results, analysts say that the U.S. giant is likely to become little more than a niche player in the Chinese market.
"We expect access from China to google.com.hk to be at best, slow," wrote Goldman Sachs analyst James Mitchell in a Mar. 22 report, "and at worst, unavailable."
Google's exit brightens an already bright Baidu picture. With its only serious rival having hobbled itself, Baidu will now enjoy near-monopoly status in China's Chinese-language search category. Of the company's remaining competitors, "none of them has over 1% market share," says Paul Wuh, an analyst in Hong Kong with Samsung Securities. That puts Baidu in command of a small, but fast-growing market. Spending by advertisers on search in China totaled just $1 billion in 2009 and will be worth $4.9 billion by 2015, he estimates. Almost all of that will belong to Baidu, says Wuh, who expects the company's market share to jump from its current 65% to over 90% within two years.
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- Posted: 2010-03-24 10:35:13
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