How Baidu wins in China

Introduction: The latest issue of the United States "Business Weekly" print edition of the cover article on Baidu's success in the Chinese market, the law of in-depth interpretation.

The following is an overview of the article:

Schmidt said: "He can grasp the situation in China"

Many CEOs have admirers, aged 41, and Baidu CEO Robin Li, who has studied in the United States, has a fan team. Every year, when the "Baidu World" Conference is held in Beijing, Li's fans will come to contact their idols at close range.

The world knows Baidu because the search engine beat Google in the Chinese market. According to internet users, China is the world's largest internet market, while Baidu has a 73% per cent market share in China and is the world's fifth-largest (38.3 billion-dollar) net-worth company, the top four of which are Google, Amazon, Tencent and the only weak ebay. Baidu is now 57% bigger than Yahoo, and the outlook is much brighter than Yahoo. Baidu "has the best business in the world," said Gene Munster, Piper Jaffray analyst at US investment Bank, "it is extremely profitable, has a huge potential for growth in Chinese netizens and is supported by the government."

Since January this year, Baidu's share price has doubled a lot. At the same time, Google began to jump all the search results to Hong Kong's website, leaving the company a huge advantage. "We sent Robin a big gift. "Google CEO Eric Schmidt said.

Although Li has barely got the respect of Google executives, Baidu's strategy contrasts with the sincere slogan of Google's founder, "Do No Evil," although Google is not always able to deeds. If web information is crawled by experience, and without business bias, the moral obligation of search engines, Baidu is not a moral enterprise, at least in the eyes of its rivals. Over the years, a large number of advertisers in China's major internet forums complained that for those who reduce Baidu's advertising spending, Baidu will be the site's search rankings for secret punishment. As Baidu's competitor, Alibaba said, if there are companies to accept part of Taobao's business ads, Baidu will also give unfair penalties for its search rankings.

Li denied the accusations and said there was no link between Baidu's search and advertising. "There is a clear-cut distinction between the search and advertising teams within our company. It's all a conspiracy theory. In fact, there is no reason for us to do so. The effect of paid search has been proven, and we are confident that we can make a lot of money by providing users and advertisers with the right services. ”

In addition, Baidu also denies that the company is through the network piracy to become the search market leader. However, music companies have said that Baidu's popular MP3 service allows users to download any song for free. The recording industry filed a lawsuit in 2005, but China's regional and appellate courts are on the side of Baidu. Baidu, they think, is just a link to a popular music site to provide content for users.

However, Baidu's network self-discipline performance is very good, the company last year by the Chinese Internet Association awarded the industry Self-discipline Award.

Evil or misunderstanding?

Robin Li was born in a worker's home in Yangquan, Shanxi, with a total of 5 children, and Robin Li is the old four. He graduated from Beijing University in 1991 and received a master's degree in computer science from the State University of New York, Buffalo, in 1994. He has lived in America for many years and spoken English fluently, but his loyalty to his motherland is beyond doubt. Mr. Li said Baidu would adjust search results according to law, otherwise it would be possible to revoke licences that would hurt users and investors. "If the law expressly prohibits specific information, such as pornography or anti-government information, I certainly have reason to do so," he said. "He was in the Baidu World Congress a few days ago, sitting in the newly completed the roof of Baidu headquarters Rockery Garden said this remark." Baidu's new headquarters is an area of 91,500 square meters of construction, inside the gymnasium, yoga Hall, lounge and other facilities complete.

Instead, Li has focused on the future: expanding into games, e-commerce and online payments, creating a video site similar to Hulu, and building Baidu brands abroad. He says engineers are translating the site into dozens of languages. "I hope that within 10 years, Baidu will become a household name for half of the world's population." Sooner or later you will see a Chinese company that truly has global clout, and I believe that Baidu has an opportunity to be a part of it. We should have global competitive power. ”

However, before Baidu expands, it needs to answer a question first. In the current era, even the most transparent Internet companies will encounter difficulties in maintaining user trust. "Why should I believe in Baidu?" "The question is a senior member of the New American Foundation (Foundation), who specializes in China's internet, Rebecca MacKinnon (Rebecca MacKinnon)," said America.

This June, Baidu hired internet authority personage, former Tang Dynasty band member Kuo as a spokesperson. Kuo a broad part of the responsibility is to promote the global Baidu. "For Baidu, it's better to look from the inside than from the outside." "he said.

Baidu said that it does not do evil, but was misunderstood by the outside world. And because it wants to move into E-commerce and video gaming, and plans to expand overseas, the company wants the world to better understand it and trust it.

The key to fixing Baidu's brand is to sell Robin Li. Robin Li once in the Forgotten old network portal InfoSeek work, office location is a small cubicle in Silicon Valley, the annual salary of 45,000 dollars. But now he is the second richest man in China. According to Forbes magazine, his net worth is as high as 7.2 billion dollars.

Robin Li is a steady speaker, but he is not interested in the audience and is always alert when communicating with the media. His friends and college students think that he is still an engineer in his bones, the dedication of Baidu molded him. They can tell many stories of Robin Li working around the clock, and many times when he was driving home, he was too tired to walk to the front door and fell asleep directly in the car. As for his belief in Baidu, there is a number that says: According to public financial records, Li never sold a share of Baidu.

Recently, Li began to build an international reputation. This July, he first attended the annual Allen & Co, held at the Idaho State Solar Valley in the United States. Media summit and forged a coalition with Facebook founder Mark Zuckerberg (Mark Zuckerberg). Executives on both sides confirmed that they had been talking to each other for several times. On November 15, Li will also participate for the first time in a public forum in the Silicon Valley Web 2.0 summit.

Li's biggest supporter is his American investor. Ten years ago, they supported an introverted search engineer, but never expected to get such a generous return. "He has all the qualities of a good entrepreneur. "We were worried about his marketing skills," said Hugo Shong, the founding partner of IDG. He was too quiet. "IDG has a deep connection with China, which invested $1.5 million in 2000, while the stake was worth as much as $170 million in Baidu's 2005 IPO," said the company.

Scott Walchek, an angel investor at Scott Volcsek, has also invested 1.25 million of billions of dollars in Baidu, and eventually made a profit of $ hundreds of millions of. He said that in the early days of Baidu's development, he and many American investors almost everything can not agree with Li. "He almost disagrees with everything we think he should do," he said. But he's always right. "Volcsek said.

Chinese pride from the United States

Baidu is China's pride, but it originated in Silicon Valley. In 1998, Robin Li's pioneering partner, Xu, a sales representative for an American biotech company, decided to shoot a documentary about American innovation. They found the famous Chinese documentary director Ms. Yang and met with venture capitalists Michael Morez Michael Moritz and later Stanford University President John Hannis (John L. Hennessy). When Xu met with Yahoo co-founder Jerry Yang, he also brought two friends: Melissa, who also worked as a sales rep, and his husband, Robin Li.

When Xu and Jerry Yang interviewed, Li and Melissa all looked very quiet. "I was inspired to see a Chinese entrepreneur who created such a great enterprise, and I believe Robin Li was inspired," he said. "More than 10 years later, Xu recalls the situation," he said.

When the film premiered at Stanford University in 1999, Melissa the Xu and announced that she wanted her husband to be the founder of an internet company.

Robin Li was a true believer in search. In 1996, he was awarded a patent for link analysis, which ranked the search results by the number of links available on the site. Larry Page, who also studied at Stanford University and Saigi Brind (Sergey Brin), also developed a similar PageRank algorithm independently. Inspired by Jerry Yang and encouraged by Melissa, Xu and Robin Li decided to use Li's research to create a search engine for the still-emerging Chinese internet market.

They got the business plan in front of Bob Kim (Bob King) in search of start-up funds. Bob, a venture capitalist with a reputation for Silicon Valley investment, has been involved in early investments by Oracle and Intel, and has also appeared in the Xu documentary. "Robin Li wants to create a big media company," said Bob Gregg Penna, then partner. This was his original idea. We do not believe that this can be achieved. We felt that if we did, he would really be the one to support. ”

After 1.2 million dollars of start-up money from Bob, Bonner and Volcsek, Xu and Robin Li left their wives in the United States and moved to a hotel room near Peking University. They lived there for over a year and worked 15 hours a day in a nearby office. Later that year, they got another 10 million dollars from IDG and DFJ Global venture capital (Eplanet Ventures).

Initially, Baidu did not follow Google. Robin Li and Xu are more eager to be the next Inktomi, a company that provides search for web portals, which was eventually bought by Yahoo. 235 million dollars in 2002. Baidu initially did not set up an independent company, but the search technology authorized to the then dominant portal Sina and Sohu. Whenever a user searches, Baidu will charge them. Sohu Chairman and CEO Charles Zhang admits that they were all busy copying Yahoo's portal model, unaware of the potential for search. "That's why Baidu is seizing the opportunity and we're not paying attention to it," he said. "he said.

Google loses a chance

But as search volume increased, the relationship quickly deteriorated and eventually burst. Baidu is starting to develop its own website. Chen Shinjin, a Hong kong-based partner at Shizhindfonger Global Venture capital, said he was worried about Baidu's prospects and contacted the fund's investor Jerry Yang, hoping to sell Baidu 40 million dollars to Yahoo. I wonder if Jerry Yang remembered the film's Li, who turned the issue over to a Yahoo colleague, but did not get an answer. Baidu has no choice but to fully develop its own website. "We were forced to become baidu.com. "Chen Shinjin said.

By the year 2004, Baidu followed the example of California's corporate overture, allowing advertisers to appear at the top of related search results by bidding. Baidu is starting to profit, and traffic is soaring with Chinese netizens. That year, Baidu completed the third round of financing of 15 million dollars, of which 5 million dollars from Google. Google hopes to use the deal to establish a relationship with the Chinese venture. James Mi, a former Google executive and currently engaged in venture capital work in Beijing, says that while Google has been providing search services to the Chinese market through overseas servers since 2000, the aim is to lay the groundwork for possible future acquisitions and prevent rivals from acquiring them.

From the outset, Baidu and Google do not trust each other. At the end of 2004, Brin and Page visited Baidu during their visit to China. Xu said that the Baidu team will meet in the National Day holiday, so the office empty, which makes Google executives can not know the number of engineers Baidu. Brin and Page also rejected the offer by Baidu for a sandwich lunch. James Mi recalls that this was due to the fact that Google's two founders had recently been sickened by an unfamiliar diet in India and were therefore extremely cautious. When Brin asked if Baidu's icon was a dog's paw, he corrected him without mercy (it was a paw). "We respect Google, but as a company, we have a competitive relationship and I want to make sure that they respect us." "Xu said. He left Baidu at the end of 2004 and founded a venture capital firm focused on the biotech sector.

The takeover and investment offer ensued in July 2005, ahead of Baidu's imminent listing. Things about these offers have never been disclosed. SoftBank founder son wants to keep Baidu as a private company and is willing to inject $100 million trillion into Baidu with a 1 billion dollar valuation, according to several people familiar with the matter. Yahoo and Microsoft have also issued a takeover offer for more than 1 billion dollars. Google is closely watching Baidu's listing process. Google, which had an IPO in 2004, had a market capitalisation of $27 billion trillion. The company's think-tank in China wants them to bid for Baidu at a price of 2 billion dollars, but Google's management ended up offering only a 1.6 billion dollar offer.

Baidu's board of directors has split, DFJ's US partners lobbied aggressively to sell it to Google. "It's obviously a very stressful time for me," he said. "I negotiated with potential investors during the day to tell them why they should buy Baidu shares," Li said. In the evening, I telephoned the directors to explain to them why they could not sell the company too early. ”

After weighing the possibility of Li's departure and abandoning a takeover, the board eventually decided to go public by anonymous voting. DFJ, the founding partner of Global venture capital and Ascha Jemo of Baidu, Asad Jamal, believes that if a 2 billion dollar offer is offered, it may lead to acquisitions. "I personally think that Google has lost a chance. "he said.

Baidu understands Chinese more

Baidu landed on Nasdaq on August 5, 2005, when its share price soared from $27 to $122, making the company's valuation as high as $4 billion, and allowing Baidu's early investors to profit $ hundreds of millions of. The news of Baidu's listing has also deeply touched Chinese users and advertisers, and has made Robin Li the first billionaire network prodigy.

In response to Baidu, Google has dug up a famous computer scientist, Lee Kai-fu, and founded a research and development center in Beijing. "I was worried that Google was too rich. "said Li.

However, Google has never made a substantial threat to Baidu, the margin is intriguing. One obvious phenomenon is that Google's services in China are often inexplicably unstable. Because DNS (domain name resolution System) failure, user input google.cn, even once was pointed to Baidu.

In November 2009, Kai-Fu Lee announced the departure of Google, the creation of a network incubator, led to Google's leadership team in China chaos. Two months later, Google will Google China's page to jump to Hong Kong's servers.

In the face of U.S. rivals, Mr. Li said his first reaction was to weaken the identity of Baidu's Chinese company because "in the minds of most consumers, the quality of Chinese products is very low." "But in a widely disseminated television commercial, Google is portrayed as a fool who knows only one way to read complex Chinese, but Baidu can handle it accurately." Speaking of the ad, Li said: "It is the easiest way to let them know that Baidu understands Chinese more." ”

For years, Baidu has done a better job of analyzing Chinese sentences. Baidu has also deployed more salespeople to negotiate with advertisers, proving that the company does understand Chinese preferences better. Baidu's homepage has 11 underlined blue links, pointing to Baidu know, Baidu Bar, Baidu Encyclopedia and other services. Similar to Google, Baidu is also a verb, Baidu search box on the side of the button wrote "Baidu". "Robin Li has brought the best things in the United States to China and added Chinese elements," said Tim Draper, a venture capitalist in the US Tim Drape. ”

Baidu MP3 Search is particularly attractive to Chinese netizens, which is not surprising, after all, it can help users download music for free. During the IPO, Baidu said music services accounted for about 40% of its total traffic. (The company now says the proportion has fallen to 5% as digital music cools.) Baidu said it had been trying to reach an agreement with the record company and in 2008 hired Catherine Leung, a global record-Takesse, to take charge of the business. However, Robin Li believes that piracy is not his problem. "If users are looking for something that is public, we can't say, in order to please the record company, let's completely block this kind of service." We didn't choose that way. "Sohu CEO Charles Zhang believes that this kind of justification" is in Daguanqiang. They did not do evil, but were spreading evil. "Of course, Sohu also offers free music links." Charles Zhang said he would not clean up the links unless Baidu did the same. "We're just following the big fish. "he said.

Google has never violated copyright in the same way because it has a good relationship with the US entertainment industry. It was not until 2009 that Google worked with record labels to launch a free music service in China that earns revenue through advertising. Baidu is a popular choice, while Google is seen as an intellectual search engine that admires Google's strength of character. Li is on the way to the office, in the car through the portal friends sent messages, heard that Google threatened to withdraw from China. Speaking of this issue, Li said: "I obviously do not agree with their way of dealing with the problem." "Despite the difficulties, there are millions of Chinese websites that are available because people can find them through search engines," he said. "Some people don't like us. I think it's normal for a service that has hundreds of millions of users a day. "he said.

Meet the real challenge

A few hours after meeting with fans, Li made a speech in Chinese at the Baidu World Congress. Facing the stage developers and leaders at all levels, he announced that Baidu will begin to integrate games, videos and maps directly into the search results. He then praised Wan Gang, the Minister of Science and Technology, saying he clearly expressed the need for such a function. For people outside China, the situation is rare indeed.

This August, Xinhua announced that it would work with China Mobile to develop a search engine. September, "People's daily" also appointed former table tennis world champion Deng Yaping for its operations search engine business. Baidu is not worried about the complex technology of developing search engines by official agencies. But for those familiar with the Chinese market, this series of events sends a strong signal: don't feel too good about yourself.

With Google's exit, Baidu is currently working with Alibaba and Tencent to form the tripod pattern of China's internet market. Alibaba has blocked Baidu, banned its index Taobao, and independently launched a shopping-oriented search engine. Tencent has also attracted a large number of engineers from Google and Baidu to improve search. "It's a real war," he said. "It makes Ellison and Mr Gates Tom Merce," said Tom Melcher, an American entrepreneur who has lived in China for 8 years. "One of the evidences is that John Spelich, a spokesman for Alibaba, said in August this year that John Spilic," These guys are like robbers. Kuo, however, responded that Alibaba executives were "good whining little scumbags." ”

In a rehearsal on the eve of the Baidu World Congress, when asked about the satisfaction of Baidu's balance between government and users, Li replied: "Ultimately, if users can't find what they want, they won't use you." If they find it, they'll come back. ”

Of course, if you believe that Baidu always has a unique local advantage over rivals like Google, it is because this view has never been really tested. With other Chinese Internet companies starting to build their own search engines, and with the ambition of Li to enter the established overseas markets of western companies, Baidu will face tougher challenges than ever before. Global netizens will ultimately decide whether they can really trust Baidu. (Ding Macro)

Source: Sina Science and technology