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September 16, 2005
Google to acquire BAIDU ?
So for the last week or so, everyday I get an email asking me what I think of "Google buying Baidu" ?
So here's my take
The time I have spent in China in 2005 and having talked to many Business Folk, End Users, Advertisers, Taxi Drivers and Part Time Girlfriends has led me to 1 thing.
Baidu run the show!
I will try and explain it in simple terms and hope no one is offended by the example I am going to use.
Taking on Baidu or Alibaba in China for Google and Yahoo, is very similar to me wanting to sell Books to Schools in the USA when my competitor happens to be Minister of Education, basically it ain't gonna happen.
In CHINA it's all about who you know and your relationships with these people, and this (in my opinion) can not be bought with $$$s.
Yahoo have obviously realised this and hence decided the best route is getting the local guys to run their business for them whilst taking ashare of the bigger Chinese Mooncake.
Google on the other hand are a kick axx company with some very very smart people and an amazing brand, however China is 1 place where all this can mean very little or very much dependant on the mood of the people, and at the moment it's all about Baidu.
An outright buy or a much bigger partnership would make total sense, as ultimately it's about the advertising $, and this Google has lots of when you look at their advertiser base, Baidu has the user base but very little of the foreign $$$s are coming through, although their marketing activity is being ramped up since the IPO.
For a Western company trying to advertise on BAIDU is similar to me asking for "Toasted Cheese Sandwich" and being handed "Cheese, Bread and a Toaster with Chinese instructions"
As a sidenote, there may be all sorts of political and financial wall street type reasons for the above to take OR not take place, however there are many more qualified folk to share that kind of news with you.
I am just sharing it from my point of view, having been 1 of Google's earliest paid advertisers in 2001, having been involved at Webmasterworld as moderator for the Google advertising forum for 2 years, Having spent millions of $s gloablly with Google, and now sitting here in Shanghai looking at the Bigger picture and being asked questions by Advertisers on how they should spend their search $s in China.
(Comments open on this thread as a trial)
Posted by shak at September 16, 2005 10:26 AM
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I don't think that Google - Baidu deal is very likely, first because the Chinese search market is in its infant stage at the moment and anyone can emerge as a leader at a later stage. At such point you don't need to buy your competitor, on the contrary - you need competition to educate and cultivate the market. Secondly, Baidu is very pricey at its current price of about $80 and a market cap of $2.6 billion. If all goes well it will probably take Google about 10 years to get that money back in the form of earnings. This is about 7% annual return. I think they can get a much higher return if they invest their cash in their own projects. If however the price of Baidu falls to very low levels, Google may take the chance to get a strategic advantage in China by buying its main competitor.
Posted by: jivko rusev at September 16, 2005 7:43 PM
well..baidu is my homepage..i am using baidu all da time anyway(for Chinese)and using google for english...
donno about business thin but i am sure china is a big maket..umm...coz there is about 100000000 people using da internet like~.
Posted by: kandy at September 17, 2005 3:47 AM
Wonder if they'll make Baidu into English also...
Posted by: Uncover China at September 26, 2005 8:49 AM
Baidu is just starting to take there share of the market place. In time they will be very popular around the world. Business will boom for awhile, and they will be ready for people to use them in many avenues of business and information.
Posted by: greg collins at November 8, 2005 3:50 AM