Google vs. Baidu

Google (GOOG) is dominant search engine in US and in many other countries. But there are still some countries where Google plays second role and is well behind local search engine. For example in Russia the number one is Yandex and in China Baidu (BIDU).

Currently Baidu share accounts 60% (up from 58% y-o-y) of total searches compared to Google with 26% (up from 17% y-o-y). The question is if the leadership is sustainable. Google already started with introduction its sites in Chinese version. Good example can be Chinese version of Google Finance site. How important is Chinese market the following statistics show. 427 million people search in English and 233 million people in Chinese. Google CEO Eric Schmidt already announced last year the intention to be market leader in 5 years.

Many Internet users are more familiar with Baidu which started earlier and attracted visitors by facilitating access to free music. Download free MP3 files generates huge traffic and this is one of the most popular online activities. Another key driver is seen with educational business practices towards small businesses about keyword search and its monetizing it up front.

Investments in Chinese companies is a part of Google strategy how to expand in the country. Up to now they are focused on social networking projects and mobile Internet. Google invested in Tianya, social networking web site, and Xunlei Network Technology, video and games downloads provider.