Baidu tempers chase for profits

PUBLISHED : Thursday, 01 October, 2009, 12:00am
UPDATED : Thursday, 01 October, 2009, 12:00am

Search engine Baidu's triumphs and tribulations mirror the trajectory of contemporary China's business community. The Chinese-language information technology powerhouse copied its business model from established Western counterparts, expanded rapidly by capturing the imagination of investors abroad and has been accused of putting profitability before ethics.

Baidu was set up in 2000 by a group of IT engineers led by Robin Li. Li, 41 next month, was born and raised in Shanxi , an inland province with a mercantile heritage dating back to the 15th century.

In eight years, Baidu grew from nowhere to being the biggest search service provider for the 300 million-plus internet surfers using the Chinese language, a component of the technology-heavy Nasdaq-100 index - with around US$12 billion in market capitalisation - and a company whose annual profits have soared over the past three years.

But Baidu's woes are just as glaring.

Though insisting on its uniqueness, Baidu has apparently modelled itself on Google. It has also long been accused of collaborating with the mainland authorities in censoring information, encouraging piracy by granting access to unauthorised music downloads and pocketing handsome gains from artificially boosting the profiles of websites willing to pay big.

The barbs culminated last November when Baidu's paid-listing business was called into question. Unauthorised and unlicensed medical websites captured the top listing positions in Baidu's search results, owing to their willingness to pay higher prices for popular keywords. In contrast, some legitimate portals, including charity sites, complained of being blocked by Baidu after failed negotiations over the prices charged by the search engine.

Those revelations came only months after the firm was accused of helping domestic baby formula maker Sanlu cover up a tainted milk powder scandal which led to the deaths of at least six infants and left around 300,000 ill.

While Baidu denied doing Sanlu any favours, it admitted to a blind chase for profit. In response to critics, the company cleaned up its act on advertising and promised stricter business discipline.

Baidu has since launched a corporate social responsibility charm offensive, including the launch of an online search service catering to the elderly.

Thirty years after the country unleashed its mercantile instincts, best exemplified by Li's hometown ancestors, China's businessmen are being urged to heed the following mantra: the greater the power, the greater the responsibility.

Catching the wave

By the end of last year, internet penetration has reached 22.6% of the mainland population, according to the China Internet Network Information Centre. The number of internet users was estimated to be: 298m

The increase of 88 million users, from 210 million in 2007, represents a growth rate of: 41.9%