Turf war looms for a Google-free China
Updated
And the extraordinary run of success continues for China's dominant internet search engine, Baidu, with the most recent profit figures confirming its status as a market darling.
The company has made no secret of the fact it wants to be in the top echelon of global companies, but with its closest rival Google contemplating leaving Chinese cyberspace, Baidu could face increased competition on its home turf.
Presenter: Scott Alle
Speakers: Duncan Clark, chairman of BDA; Sandy Shen, a director of research at Gartner
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ALLE:
When you're the biggest player in a market that's adding thousands of new customers every day it's hard to go wrong.
Baidu, China's biggest internet search engine has posted a 50 per cent rise in quarterly net profit of $63 million, reflecting the explosion in online usage.
Duncan Clark is the chairman of BDA, an investment advisory firm based in Bejing.
CLARK:
We're seeing very big increases in both the number of people online the number of broadband connections and the richness of what people are doing online.
ALLE:
When the majority of China's 340 million internet users want information they hit Baidu.com.
Naturally, last month when Google announced it was considering pulling out of China unless authorities allowed unfiltered search results, shares in Baidu - which enjoys an estimated 58 per cent share of the market - shot-up ten per cent.
But Duncan Clark says Baidu won't automatically reap all the benefits of its biggest rival logging-off.
CLARK:
It's certainly been emboldening their competitors such as the e-commerce leader Taubau or Tencent or Sohu or some of the other players so I think some of the benefit of Google's imminent departure would more be for Baidu's competitors than Baidu itself.
ALLE:
The company been a favourite for investors, who clamoured to get on board when it listed on the Nasdaq five years ago.
Sandy Shen, a director of research with consulting firm Gartner in Shanghai, says Baidu's dominance stems from its understanding of what the local market wants.
SHEN:
Their strength is really in catering services to local users preferences they have intiated new services like postbar, where people can post questions in a separate space.
ALLE:
The company sees growth in the next five years coming from in China's second and third tier cities where it's confident it has more mainstream appeal than Google, which is perceived to be to be more popular with white collar workers.
Baidu is expanding its video downloads, with tech savvy 20 and 30 somethings bored with the offerings on state run media.
Duncan Clark from BDM.
CLARK:
So I think video seems to be the main expansion for them at this point. I don't see them expanding into games or other areas. Advertising plays well on the video platform.
ALLE:
But currently the attention of China's netizens is on Google's dilemma, whether it will reapply censorship filters or pull-out of a very lucrative market.
CLARK:
I woud think something has to happen in the next few months. We have Chinese New year coming-up which is an excuse everybody can use, but it gets into march if Google is censoring its site it doesn't seem to live up to its commitments.
ALLE:
Sandy Shen from Gartner consultants doesn't forsee Google abandoning its share of Chinese cyberspace.
SHEN:
My personal view is that chance is quite low because I think China is an important market for Google and I don't they completely want to leave this market
ALLE:
Even though Facebook and Twitter are blocked by Bejing, other forms of micro-blogging have very big followings.
But Baidu's management deny even as the government's preferred player, it self censors more than other search engines.
What is on its side is the fact that it is a Chinese company best placed to take advantage of burgeoning social change.
