MySpace and Wikipedia clones storm China

Search leader Baidu's revenue up 175 per cent with new services

By Simon Burns in Taipei 28 Jul 2006

Baidu, China's leading web search company, reported a 174.9 per cent year-on-year rise in revenues for its most recent quarter.

The search firm holds close to half of the Chinese search market, according to analysts, and generated $24m in the quarter to 31 June.

The revenue figures represented a 41.3 per cent increase over the previous quarter. Baidu's net income also rose 65.9 per cent from the previous quarter, to $7.3m.

However, the total revenue shared by players in China's nascent online market remains tiny compared to the billions generated by firms like Google in more mature international markets.

Baidu has doubled research spending and significantly expanded its sales staff over the past year, and both moves have helped to improve revenues, according to executives.

The company has attempted to increase traffic recently with new community-driven services that mimic popular international sites like MySpace and Wikipedia.

These initiatives have been a success, according to Robin Li, Baidu's co-founder, chairman and chief executive.

"Our community-based search products, including Baidu Post Bar, Baidu Knows and Baidupedia, have become increasingly popular because they make users stay connected while searching online," explained Li.

"In July, we launched Baidu Space, which allows users to create personalised homepages on Baidu and integrate their use of other Baidu search products in one place.

"We will continue to develop products tailored to user needs to ensure that Baidu remains the search engine of choice in China."

Baidu's share of the Chinese search market was estimated at 43.9 per cent in the first quarter, putting the company far ahead of competitors.

During the same period, Google held 13.2 per cent of the market and Yahoo 21.1 per cent. This data comes from Beijing-based research firm Analysys International.

"Our active customer base grew significantly in the second quarter due to expansion of our salesforce and increased awareness of Baidu's pay-for-performance services," said Shawn Wang, Baidu's chief financial officer.

"In addition to customer base expansion, further optimisation in our monetisation algorithm also contributed to strong revenue growth."

The company currently expects the current rapid rate of growth to continue, with a rise in revenues to between $30m and $31m in the next quarter, according to a press statement.

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