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Baidu.com (Ticker: BIDU)
Company Profile and Private Investigations

Note: Baidu was recently sued by 8848.com, another Chinese Internet portal company, for launching DDOS attacks on 8848.com's servers, causing a 26 hour break-down of services provided by 8848.com in January 23 or 24 of 2005.  This reminds us of a rumor that Baidu.com "encouraged" the Chinese government to block and redirect Google's index page several times in the past.

Company Profile:

Baidu.com, Inc. provides Internet search and online marketing solutions. Baidu also develops and markets Web application software and provides related services. The company’s services are designed to enable Internet search users to find information online, including Chinese language Web pages, news, images, and multimedia files through links provided on its Web sites. Baidu currently provides users with access to an index of approximately 690 million Web pages, 80 million images, and 10 million multimedia files. Baidu also offers P4P platform, which enables its customers to reach users, who search for information related to their products or services. In addition, it offers Baidu Post Bar, a query-based online community. The company sells its online marketing services directly and through its distribution network. Baidu.com was founded by Robin Yanhong Li and Eric Yong Xu in 1999. The company is headquartered in Beijing, the People’s Republic of China.

Baidu currently provides information and services in Chinese only.

Our Private Investigations:

Unlike many other Chinese companies in our list, Baidu is a company with real potentials.  However, we have to realize that the public relations department at Baidu.com has done an excellent job at promoting this idea of a potential Chinese Google, which might not be good for investors in general.

Compared with Google, which offers services in many languages, including Chinese, Baidu has its limitations in several aspects:

1. Credit usage is not popular in China, delaying the expansion of Baidu's online advertising income sources.

2. Baidu only offers services in Chinese, which, in terms of potential revenues, does not match those from similar services offered in English (by Google).

3. Baidu's ranking moved up soon after the Chinese government blocked access to Google by Internet users in China.

4. Most searches on Baidu are mobile phone ringtones, mp3 songs, emule or bit torrance movies, and/or other downloads that involve intellectual property related issues.  Most educated people still use Google (Chinese).

5. Baidu puts as many advertisements as possible on its search results, and sometimes, people have to go to page 5 to see natural search results.  This affects the quality of its searches.

For more information and our analysis on Baidu, please see China Investment Report


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