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Baidu's CEO Pursues Long-Term Growth Baidu's CEO Pursues Long-Term Growth Baidu's CEO Pursues Long-Term Growth Baidu's CEO Pursues Long-Term Growth Baidu's CEO Pursues Long-Term Growth Baidu's CEO Pursues Long-Term Growth


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Baidu's CEO Pursues Long-Term Growth

By OWEN FLETCHER
Wall Street Journal
August 4, 2010

Google Inc.'s pullback in China earlier this year left homegrown giant Baidu Inc. more dominant than ever as China's biggest search engine.

Now, Robin Li, Baidu's chief executive, must figure out new ways to grow amid immense investor expectations.

Baidu's CEO Pursues Long-Term Growth.

Mr. Li, a soft-spoken 41-year-old engineer who co-founded Baidu in 2000 after a stint in Silicon Valley, dismisses concerns that growth in Baidu's core China search business will dry up anytime soon. With more than two-thirds of China's population not yet Internet users, Mr. Li says search advertising will remain Baidu's main growth driver for five to 15 years.

But he is looking to develop other revenue streams, including overseas and from ads on content pages created by Baidu or partners. He would also consider buying foreign Internet companies.

Baidu has played down its benefit from Google's moving its China search service to Hong Kong, but Baidu's share of revenue in China's search-advertising market grew six percentage points in the second quarter to 70%, according to Beijing-based research firm Analysys International. Google's share fell by about the same amount-to 24%.

Mr. Li shared his strategy at Baidu's Beijing headquarters.

Excerpts:

WSJ: How would you describe China's search market right now?

Mr. Li: The search [advertising] market in China is still relatively small-smaller than the U.S., smaller than Japan, smaller than the U.K., but it is growing very fast.

WSJ: How did Google moving its China search service to Hong Kong in March open up new opportunities in China's search market?

Mr. Li: [By drawing attention to the search business] it helped educate the advertisers that search is one of the best ways for them to reach their targeted consumers. So in this sense I think it did benefit us a little bit, but because we already have such a large share, it's not obvious how much traffic we gained over this.

WSJ: Beyond search, what will be your middle- and long-term revenue drivers?

Mr. Li: The search market is in its early stage. We would be able to enjoy many years of high growth for our core search business.

And secondly, I think there are two types of growth drivers in the mid to long term. The first one is what we call the landing-page opportunity. We started to build our own content and integrate those kinds of content on our search result pages. Those kinds of content pages, we call it a landing page. We can also place sponsored links on the landing page.

One example is the Qiyi venture, [an online video-streaming site]. When people search this type of content on Baidu, we can direct users to Qiyi. And Qiyi itself can show advertising there, and make money.

There are many examples in other sectors that we would like to do going forward. So I think five years down the road, we should have a meaningful portion of our revenue from the landing-page strategy.

And the third [future revenue driver] is, of course, international.

WSJ: What are your plans for international expansion?

Mr. Li: We already started our international expansion. We launched our Japanese search [site] a couple years ago. But we realize that international expansion is a long-term investment.

I think that five to 10 years down the road we'll have a very meaningful part of our revenue come from international expansion. Right now, we only have one other language, which is Japanese, but moving forward we would launch a lot more other languages.

WSJ: Any plans to expand to the U.S.?

Mr. Li: In the U.S. you already have very strong search-engine players-Google, Microsoft, etc. I think we would be cautious entering that market. So for our international expansion we will probably avoid the U.S. for the time being.

WSJ: How do China's censorship regulations affect Baidu operations?

Mr. Li: We are used to it. We are based in China. We obviously need to abide by the Chinese law. What we found out is that our users are not very interested in those [censored terms]. They look for entertainment-oriented information, they look for business-oriented information, lifestyle, all kinds of things.

WSJ: Does it raise costs for Baidu?

Mr. Li: It does. It's a fairly comprehensive system that we need to ensure that we take necessary steps against some illegal content.

WSJ: Are you looking at M&A or investment opportunities overseas?

Mr. Li: We'll be open-minded. I think there are quite a few interesting companies outside of China. They provide good, innovative services. They're doing well, they're making money, but they're not in China. By partnering with those kinds of companies we can help promote and expand their businesses in China.

WSJ: So you're looking for partnerships rather than acquisitions?

Mr. Li: Not necessarily. Anything's possible. We'll deal with this on a case-by-case basis.

WSJ: Are you concerned that growth might not keep up with investor expectations?

Mr. Li: I'm not concerned. I don't run the company based on investor expectations. I run the company based on our own vision of the future of Internet computing and the future of the Chinese market.

I'm the founder of the company. I will stay here for a very long time. I don't need to please those short-term investors for next quarter. I need to make sure the company is healthy and strong and will continue to grow for many, many years.



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