Baidu, the largest Chinese search engine, made its first foray into overseas market in 2008 with the setup of its Japanese branch and the launch of localized search engine catered for Japanese market. However, large-scale investment hasn’t brought Baidu any return yet.
According to an SEC filing by the search giant, Baidu’s overseas expansion brought about a total loss of over RMB 680 million (US$ 105 million), separately, RMB 196 million (US$ 30 million) in 2008, RMB 224 million (US$ 34 million) in 2009 and RMB 260 million (US$ 40 million) in 2010. The loss mainly consists of operating expense, executive expense, Stock option compensation expense and so on.
On the other hand, Baidu’s American counterpart Google generates 52% percent of its total revenue from markets out of U.S., while almost all of Baidu’s revenue comes from Chinese market. Baidu hasn’t reaped revenue through overseas operation yet albeit huge investment. Baidu SVP Shen Haoyu disclosed that Baidu hasn’t started selling ads on its Japanese search engine.
Japanese search market is dominated by Yahoo (over 50%) and Google (over 30%). The two Japanese internet powerhouses announced a partnership in which Yahoo! Japan would adopt Google’s search technology to run its service last July to strengthen their leading position. It makes expats such as Baidu even harder to penetrate the market.
No surprise as they rely on a protected home market and will not be succcessful overseas.