Baidu Goes to Tokyo

It took awhile, but Baidu (Nasdaq: BIDU) is now up and running in Japan.

Thirteen months after the company announced plans to break into the competitive Japanese search engine market, Baidu's site debuted in its full-featured glory today. Baidu.jp has been online since last March, but that has been mostly in a rudimentary state with limited search functionality. Today's formal launch goes beyond text and digital snapshot queries, scouring Japanese language sites for everything from videos to travel-planning services.

It's easy to see why Baidu's first foray outside of China is in Japan. The languages bear little resemblance, but are both character-driven. That is Baidu's forte, leading it to command more than twice the market share in China as its nearest competitor, Google (Nasdaq: GOOG).

Japan's population is significantly smaller than China's, but the advanced economy translates into higher revenue per ad.

This doesn't mean that Baidu's success is a given. It's not. Japan's search engine market is dominated by Yahoo! Japan -- the joint venture between Yahoo! (Nasdaq: YHOO) and Softbank -- and Google.

Even if Baidu is a recognized brand in Japan and the countries are active trade partners, Baidu.jp will have to bring something new to the table if it plans to make a dent in an established market.

Baidu is more than just a search engine in China. It offers Web features like an active discussion board community, a Yahoo! Answers Q&A clone, and a desktop search tool. That's novel stuff in China, but Japan will view that like a jaded birthday boy trying to be entertained by a magician with familiar illusions.

Keep in mind that Baidu doesn't have to make a killer profit in Japan for the new portal to be a success. If it works as a gateway drug, introducing Japanese advertisers to Baidu's flagship site as a way to reach the Chinese consumer, Baidu will have won.

I mention this only because it's unrealistic to expect Baidu to walk away with a big chunk of the Japanese market, at least initially. Established markets are tough to crack. No one knows this better than eBay (Nasdaq: EBAY), a company that has had to bow out of both Japan and China. Even a stateside stud like Microsoft (Nasdaq: MSFT) has come up lame in China, ultimately handing the monetization keys to Baidu in that country.

Will Baidu eventually find a savvy Japanese partner the way that Yahoo! did when it hooked up with Softbank to make Yahoo! Japan the country's top dog? Perhaps, but Baidu will be best served by seeing how far it can make it on its own before teaming up with a mobile carrier or Japanese media company to make inroads in the market.

I'll still tip my hat to Baidu, hoping for the best. I just hope that Baidu can take that same hat and whip something out of it that will wow the cynical birthday boy.

For more Baidu Foolishness:

• Blue, Blue Baidu
• Death of a CFO
• Baidu Bucks