How Baidu Plans to Go Global

Baidu just released a Brazilian search engine, and it plans to do the same in Thai and Egypt. Can Baidu become a truly global search engine platform?

Jul 21, 2014 at 2:30PM

Chinese-language Internet search provider Baidu (NASDAQ:BIDU) is very interested in expanding its global presence. The company has officially launched a Brazilian search engine, which provides integrated web, image, and video search functionality. More importantly, the company announced it is setting up a research and development center in South America's largest economy, and it is currently in talks to partner with local universities.

Baidu's interest in Brazil appears to be just a small piece of a long-term strategy to increase exposure to key markets where Internet and smartphone penetration rates are still rising. A Baidu spokesman mentioned that the company will probably launch Thai and Egyptian search engines next month. But as Baidu goes global, competition with Google (NASDAQ:GOOG), which currently controls more than 60% of the global search engine market, will get fiercer. Can Baidu become a truly global search engine platform?

Baidu

Baidu in Portuguese. Source: br.baidu.com.

Failed attempts?
Baidu's interest in going global isn't exactly new. In the past few years, the Chinese search engine giant has made plenty of attempts to grow its share in foreign markets, but success has been quite limited.

For example, in 2012, the company quietly rolled out some localized products in Vietnam and Singapore, but these sites may not have generated enough traffic to become game-changers.

A new strategy
More recently, in early 2014, the company partnered with France Telecom to offer a mobile browser tailored for African and Middle Eastern users, where France Telecom has about 80 million customers. The web browser, which will be available first in Egypt, would be pre-installed in phones sold by the company's operators there.

A quick comparison between Baidu's past attempts to go global and the company's most recent international projects suggests a change in strategy. The company could now be paying more attention to establishing partnerships with key local sites, institutions, and decision makers.

Its project to increase market share in Africa is based on a partnership with France Telecom. Likewise, the recent release of a Brazilian search engine coincided with various agreements between the Brazilian and Chinese governments, including the creation of a digital city in the remote state of Tocantins. Not surprisingly, Baidu is now talking to local universities, as it plans on building an R&D center in Brazil focused on Big Data. 

The upcoming releases of localized search engines for Thailand and Egypt will likely come together with announcements of key strategic partnerships. As a matter of fact, from a technical perspective, the localized versions for Egypt and Thailand may be ready for release, as Tech in Asia spotted these versions back in January when the sites went live as part of internal testing for less than 24 hours. Baidu may now be working on creating key partnerships in Egypt and Thailand.

Competing against Google
Gaining market share from Google in foreign markets will not be an easy task. The largest search engine company in the world, which recently reported healthy revenue but lower earnings per share than what the Street expected, also needs to increase its exposure to key Internet markets in order to continue delivering steady growth in user metrics.

Most likely, competition will be particularly fierce in markets with relatively low smartphone and Internet penetration. First-time smartphone users in these markets are not totally accustomed to a particular mobile search engine. Needless to say, it is very important for Baidu to get these users before they get accustomed to Google, which has plenty of pre-installed applications on Android devices.

Final Foolish takeaway
Baidu, the largest search engine in China, is very interested in increasing its share in foreign markets. To do so, the company appears to be employing a new strategy, based on establishing key partnerships with local institutions, from universities (Brazil) to telecommunications corporations (France Telecom).

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Victoria Zhang has no position in any stocks mentioned. The Motley Fool recommends Baidu and Google (C shares). The Motley Fool owns shares of Baidu and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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