China Internet search giant Baidu Inc is likely to maintain its search lead over rival Google in China in the near term, given the firm's aggressive expansion plans, a top Baidu executive said.
Baidu, which leads Google in the world's largest Internet search market by volume, rolled out a slew of new products this year aimed at maintaining its dominant position. But the firm faces stiff competition from web portals such as Sina.com and NetEase as well as an increasingly localized and assertive Google.
It's not just at this moment that we are competing. We have a lot of new innovations to help us to maintain our dominant position, Li Yinan, chief technology officer of Baidu, told Reuters in an interview on Thursday.
Among their new products is a search platform called Box Computing unveiled in August, which allows users to input a question and retrieve an answer without having to click a link.
Li said he is banking on the intuitiveness of the search platform to enhance Baidu's market share which stands at 61.6 percent in terms of revenue while Google has 29 percent, according to Analysys International.
UBS analyst Li Wenlin said in a note that Baidu's new search solution is better than Google's, given that online information of Chinese websites is not well organized and the Chinese language requires a more sophisticated algorithm than English.
Baidu's Li said box computing was already in effect on its website but more features would be rolled out in time, declining to give a firm time frame.
Baidu is also looking at expanding its e-commerce platform Youa to tap into China's fast growing B2C market.
E-commerce will be a focus of ours over the next 5 years, Li said.
GOOGLE VS BAIDU
Google, who was a tiny player in China's market in 2003 with only a 2 percent market share has steadily grown into Baidu's formidable foe with innovative offers for the Chinese Internet surfer such as free music downloads.
However, the search titan also faced tighter scrutiny from Beijing censors who this year railed against Google for its pornographic content and asked the Mountain View, California firm to audit its searches.
But where Google has lagged Baidu, says analysts, is not in technology but in its sales and marketing effort.
According to the UBS report issued late last month, Google has no direct sales force in China whereas Baidu has close to 3,600.
We do not believe Google could gain more share at a fast pace as before, said UBS analyst Li in the report.
Most likely scenario could be a stable competitive landscape, or Google slowly taking share from Baidu if the company could launch attractive products and maintain the localization pace, Li said.
Google's former head of China operations, Lee Kai-Fu resigned last week to start his own venture firm to help start-ups. Google said John Liu, its sales and marketing head of China, will take over Lee's business and operational responsibilities.
Baidu will not be fazed by Google's incursions into its market space, Li said.
Both of us (Google and Baidu) continue to enhance our quality and I don't see that we will lose to them by a lot in any area, Baidu's Li said.
We are pushing ahead dramatically and aggressively and we are moving faster than our competitors, he added.
In the second-quarter, Baidu rolled out a new advertising keyword bidding system Phoenix Nest similar to Google's AdWords.
For the third-quarter, Baidu projected sales of $184 million to $189 million, compared with the analysts' average estimates of $178.9 million.
Analysts expect Phoenix Nest to be a key growth driver for Baidu in the upcoming quarters as China's search market continues to expand at a rapid pace.
Baidu shares are trading about 180 percent higher this year, about 56.6 times its December 2009 earnings.
(Reporting by Melanie Lee; Editing by Valerie Lee)