Sun 25 Mar 2007
American Giants Google, Yahoo! and Microsoft have made China one of their priorities for growth and are considerably expanding their research and development centers in China. Thus Google has recently announced (source: IHT) its plan to hire thousands of people for its Beijing development center; Yahoo! is launching Flickr.com, its photo-sharing site, in China and Microsoft is developing its partners network. This expansion has also raised several polemics one of whom was the rumor of complicity of Yahoo! in the arrest of a journalist in China.
The Chinese Market
Almost unknown outside China, Baidu.com is very similar to Google, has almost the same simple home page and the same Business Model. Launched in 2001, Baidu went public in 2005 and was the biggest opening on Nasdaq since the dot-com peak in 2000. According to the Search Engine Market Survey 2006 from the China Internet Network Information Center (CNNIC), “Baidu’s market share is increasing constantly to 62.1%. This means more than 60% internet users are going to choose Baidu as the first option when searching online. Google’s market share in this segment is 25.3%, decreased 8 percent points when compared with the performance at same period last year.“. Thus Yahoo! and Google are challengers on this Market which is presented below (source: NYT):
Yahoo! and Google’s Chinese Challenges
The Chinese Internet Market is very different from the Western one. Indeed in China there is a really developed entertainment culture, which appears on the Internet and which Internet companies follow. However Google and Yahoo! do not take enough this culture difference into account and therefore are loosing ground (cf. evolution of the pay-per-click market on the graphs above). However, beyond this necessary cultural adaptation, the American Giants have some advantages: a big capitalization and an important technical task force.
So, the Battle begins and is off to a good start!