Searching for the next big thing
China’s biggest search engine turns to personal transport to drive profits
Robin Li smiled when asked at a corporate shindig in 2014 to reflect on his path to becoming, at the time, China’s richest man. “I’m just lucky,” he insisted. Mr Li, co-founder and boss of Baidu, a Beijing-based search engine, may have been trying to project modesty. But his words could also have been taken literally. Thanks to government censorship, Google is inaccessible in mainland China. That leaves Baidu as the unrivalled leader in Chinese search. Slowing advertising revenues, however, are now taking it down a different road.
Baidu’s search dominance is indisputable. Its average of 538m monthly active users last year was nearly six times the combined total of the next three domestic rivals. Baidu’s share price has tripled in a year, taking its market capitalisation to $93bn. Riding this wave of investor enthusiasm, it has filed for a secondary listing in Hong Kong, with trading set to begin on March 23rd. The firm is expected to raise around $4bn. But the steep rise in Baidu’s valuation might seem unwarranted. Advertising, the main source of revenue, has suffered as the pandemic forced Chinese businesses to cut marketing budgets. Adverts on Baidu’s main search service brought in 66.3bn yuan ($9.6bn) in 2020, 5% less than the year before.
Even as China’s economy recovers advertising is unlikely to propel Baidu’s growth as powerfully as before. In recent years the supply of digital ad space in China has multiplied, depressing prices. Businesses can now choose from an array of platforms on which to hawk their wares—from addictive video apps like Kuaishou to e-commerce upstarts like Pinduoduo.