The Crown Jewel of the Internet

“Search is the crown jewel of the Chinese Internet market.” Thus came China’s search engine war, fueled by the outpouring money from foreign investors and the overwhelming number of competitors in the market.

Shortly after Baidu’s phenomenal IPO last August, , managing director of Draper Fisher Jurvetson, which invested $10 million for 28 percent stake in Baidu, said: “the war is already over, Baidu owns the market.”

Well, maybe not yet. Recent survey results by Keynote Systems, an Internet performance authority, show that Chinese users prefer Google to Baidu. According to Keynote, Google won the highest user ratings in 11 of 13 categories including general search, news search and image search, while Baidu came first only in music search.

This shouldn’t be a surprise. Even at Baidu’s IPO frenzy, CNNIC data revealed Google beats Baidu in traffic share for individuals 25 years old and up with higher education. People who use tend to be professionals with higher income, and they use Google to search for information and knowledge. On the other hand, the majority of people who use as their primary search engine use it to search for downloadable music.

In my , I talked about local players having an upper hand against their global counterparts because of their intimate customer knowledge. So far, foreign Internet companies don’t have a good record of success in China. Yahoo!, for example, entered the market early and bled money for years, but couldn’t overtake the dominant Chinese portals.

There are certainly plenty of reasons that Google may be humbled in the China Internet market.

“History has shown us again and again,” Sohu’s CEO Charles Zhang said bluntly, “just like Yahoo! failed, Google will fail. I don’t worry about Google – it’s not even on my radar screen. To us, it’s only Baidu.”

History may or may not repeat itself. I bet Google is on Charles Zhang’s radar screen now. The competitive landscape is changing quickly. Who will be the final winner of the crown jewel of the Chinese Internet market still remains to be seen.

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7 thoughts on “The Crown Jewel of the Internet

  1. PJ, I think Charles Zhang meant Yahoo! has failed in overtaking dominent web portals like Sohu, Sina, etc in China. Of course NOT in this country!

  2. Helen – Interesting article! Especially in light of the recent accusations that were flying at a Congressional Human Rights Caucus yesterday. American congressmen accused U.S. companies, like Google and Yahoo, of providing China with tools that will help limit public access to the Internet. For instance, Google’s decision to block politically sensitive terms on its new Chinese search web site. Have you heard anything about this?

  3. Helen

    Sorry I didn’t click on all your hyperlinks so you may already be addressing this.

    Just wondering about the Google censorship issue again. Maybe you can clarify why they blame Google, when China requires service providers to enforce censorship?

  4. Bonnie,

    I really don’t understand why they blame Google. To me, it’s so simple: it’s better Google is there rather than it’s blocked out – as China has done in the past. It only helps the democrocy in the long run.

  5. Hi Anonymous,

    I do not insert any comments that are not for my blogs. If you post comments to my blogs elsewhere, they will reflect here too. Please give me your name so that I know which comments you are refering to.