BEIJING, Mar.29 (Xinhuanet) -- When Google launched its Chinese language advertising service in February, the battle suddenly heated up as domestic search engine operators rushed to get a market share they deserve. Among domestic competitors, Robin Lee's Baidu seems to be one of the most promising, as the firm began generating
profits last year and 80 percent of the revenue came from paid listings.
Robin Li has a position that many people envy as
president of Baidu.com, the biggest independent Internet search engine operator
in China. The buzz surrounding the company comes as it plans to make an initial
public offering (IPO) on the NASDAQ stock market in New York, which some
analysts say will result in Baidu being worth as much as US$1 billion.
Li graduated from New York State University with a
master's degree in computer science and then joined the Wall Street Journal's
website to develop a real time financial information search system. He worked at
Infoseek, a big name in the global search engine industry.
When he returned to China in 1999, there were already
many Internet portals in the country and building dotcoms had become an
"As a scientist by training, I am a little bit
obstinate and I wanted to know how best I could use my talent," said Li.
The result of his stubbornness was Baidu.com, founded
by Li and his friend Eric Xu.
Soon, Baidu obtained the first round of investment of
US$1.2 million from venture capital (VC) firms. One year later, four VC
companies, led by US-based Draper Fisher Jurvetson and International Data Group,
invested US$10 million into the search engine operator.
Set up in 1999 in California's Silicon Valley,
Beijing-based Baidu is China's most popular search engine, Li said, averaging 30
million text searches a day in Chinese alone - a seventh of Google Inc's 200
million in myriad languages. Li declined to disclose revenue, but said the
number was doubling or even tripling every year. About 80 percent of turnover
last year came from sponsored links, where a client pays to have its name and
Web link appear at the top of a results list when particular words are searched.
Baidu's quick rise and relatively low rate of cash burn meant it has not needed
more venture capital since 2000, when it raised around US$11.2 million in the
However, after leading the search engine market in
China for four years, Baidu began to face mounting challenges in 2003.
With the popularization of the Internet in China and
the performance rebound from Chinese portals Sina Corp, Sohu.com and Netease.com
on the NASDAQ, search engines began to be regarded as the next gold mine --
after online advertising and mobile messages -- and more and more companies
entered the field.
Domestic firm HC International, which got listed on
the Hong Kong Growth Enterprise Market in December, also focuses on search
technology as one of its core businesses and formed a China Search Engine
Alliance with Sina and more than 100 local websites, as well as over 20 sites
from leading Chinese media.
US giant Yahoo acquired 3721 Network Software Co.
Ltd, which owns domestic search service provider Beijing 3721, for US$120
million. The world's most popular search engine provider, Google, was also
reported to be looking for domestic distributors.
In the face of these challenges, Li believed Baidu's
focus on a Chinese language search engine service would be its biggest
"Google provides search engine services in more than
80 languages, but Baidu only focuses on the Chinese language, so its investment
on the China market is much less than ours," he said.
As for domestic competitors, Baidu is also much more
concentrated on the core business than others, Li believed.
Sina and Sohu operate on online advertising, mobile
message services, enterprise Internet services, online games and e-commerce
Li believes his company is the most focused search
engine operator and better prepared for both opportunities and challenges than
other Chinese competitors.
"The most effective weapon for us is continuous
upgrading of our technology and enrichment of our function. Then users will
decide who is the winner," Li said.
He predicted in late December that China's search
engine market would reach US$50 million in 2003 and US$96-120 million this year.
While many Chinese Internet companies are busy with
trying to get listed on the Nasdaq or Hong Kong Growth Enterprise Market to
catch the revival of Internet stocks, Baidu remains cool to the idea, although
his company was said to be contacting Morgan Stanley for an IPO on the Nasdaq.
"We are still waiting for the right time," Li said.
The president added that a good time "benchmark" for
Baidu's listing will be when Googgle launches its IPO. He will then be able to
gauge how investors will react and use that as a reference for his company.
It has been reported that Google has selected Morgan
Stanley and Goldman Sachs as its lead underwriters and plans to register its IPO
to the US Securities Exchange Commission this month. Google's stocks are
expected to float in April and raise US$4 billion.
"We are still a start-up company and we should not
make a rash IPO until investors fully agree with us on the future path of our
company," Li said.
He said Baidu broke even in the second quarter, but
he declined to disclose the detailed figures.
Baidu gets about 80 per cent of its revenues from
paid listings of more than 10,000 small and medium-sized Chinese enterprises, 10
per cent from licensing search software to enterprises, and the rest from
licensing technologies to Internet portals in China.
Li and Eric Xu are the biggest stakeholders in the
He was named China's joint 11th richest IT
businessman in 2003 by Asia Money magazine, with wealth estimated at up to US$60
But Baidu, whose name comes from a Song dynasty poem
about a man searching for his Beloved dream girl, has had to grapple with
problems endemic in a Web community where network security has lagged well
behind the industry's explosive growth.