Google vs. Baidu: Faceoff in China!

Google vs Baidu, Who will win China?

Google (GOOG), she says, lost share in China, dropping to 17% in the third quarter, from about 19% in the second quarter.

Google chief executive Eric Schmidt (L) and ex-President of Google China Kai-Fu Lee

Lee scurried to set up an office for his incubator, raise a fund and assemble a team from thousands of job seekers. Lee’s PR reps in China and the Valley hyped his new project as his fulfillment of a dream to coach young Chinese entrepreneurs and support their best start-up ideas.

DangDang - Amazon of China!

It shouldn’t be all that surprising to see a big American brand being one-upped by a local competitor. Indeed, the story of a home-grown Chinese start-up triumphing over an iconic Internet rival is by now a familiar theme.

Just like Chinese search engine Baidu trumped Google, online bookseller Dangdang (当当网) outsmarted Amazon in China (卓越亚马逊) with better merchandising skills while Alibaba-owned Chinese auction site Taobao (淘宝网) took the lead from eBay by giving sellers a free listing of their goods and charging only for premium accounts.

Taobao, eBay of China!

What helped was being on site to respond to China’s fast-moving marketplace rather than in a faraway office on the other side of the Pacific.

And Baidu is trying to extend its search dominance on mobile phones, an area where Google has done well in China, thanks to a search deal with China Mobile, the nation’s largest carrier. In October Baidu announced a deal to provide mobile search to customers of China Unicom‘s (CHU) 3G services, and it also is testing a mobile app that features Baidu’s some most popular online tools, including a message board service. China Unicom—the country’s second largest mobile carrier—signed a three-year deal with Apple this summer to bring the iPhone to China.

Baidu to Provide Wireless Search for China Unicom's 3G Subscribers

Tech analaysts in China have said Google has done a good job understanding the nuances of the Chinese language. (Google hasn’t fared as well in Russia, where rival Yandex dominates thanks, in part, to its ability to accommodate the peculiarities of the Russian language.) Some users also say Google delivers a better search experience: Baidu had been criticized for mixing ads and organic search results on the same confusing page.

Baidu benefits from incumbent status (it formed in 2000, while Google China didn’t get going until 2006 –after Google sold a modest share in Baidu) and, its executives say, a set of tools that help Chinese users get information – not just search results. A tool called Baidu Post Bar it a bit like a social-networking application that allows users to tap other folks online for advice or comments as they are searching for, say, the best appliance to buy.

But no one, least of all Baidu executives, assumes Google is content with its position in China today. “We don’t underestimate their technology or their ability,” says Baidu CFO Li.

And while Baidu, for now, seems content to focus on search (CEO Robin Li likes to point out that the company’s other services – maps, mail, Baidu Post – all help enhance the search experience) Google’s ambitions in China go well beyond traditional online advertising and search. The company is widely believed to be looking for multiple ways to introduce its Android mobile operating platform in China, and recent reports suggest it may look to open an Android application marketplace in China.

Google to Launch Chinese Android Market?

For now, though, Google must live with its second-banana status in China. According to various Chinese news outlets, Google China issued a news release listing the most popular searches in China in 2008. The most searched term among Google users in mainland China? Baidu.

“Baidu” tops most searched terms on Google China
Baidu tops the most searched terms on google in China, according to a report-”Hottest Words by Chinese Mainland, Hong Kong, Macao and Taiwan 2009″ -Google China released Wednesday. Among stocks, Vanke A share, China Unicom and Ping An of China were the most searched for. Shanghai Composite Index, fund, exchange rate Growth Enterprise Board, and paper gold were among the top economic search terms. Google users were also curious about the prices of gold, airplane flights, steel and petrol.

Internet expert Xiewen said the report reflected Google’s generosity as well as its own flaws in China.

The report also released the most searched “economic search terms”. Shanghai Composite Index, fund, exchange rate Growth Enterprise Board, and paper gold were on the list.

In addition, it is noteworthy that Internet companies occupy the top ten “hottest searched words by mainland users” and three of them are Chinese online video sites. The emerging social website “kaixin001.com“,”xiaonei.com (now renren.com)” are also on the list, according to the report.