Google and Baidu can learn from each other in their bid to dominate the search market If imitation is the sincerest form of flattery, then mainland search engine Baidu.com must think highly of Google after finding inspiration for its home page from the minimalist design of its rival. But do not tell that to Baidu executives, who bristle at the suggestion that the most popular search engine in China is parroting Google's look. 'I don't think we copied Google's format,' chief executive Robin Li said. 'We just listened to our users. After several surveys, we realised this is the format users like. They want a simple search window.' There are also a few ideas Google can borrow from Baidu, a likely scenario as the company has taken a small, undisclosed stake in its mainland counterpart. Market watchers say the investment will allow Google to become more familiar with the mainland search business as it seeks overseas expansion. 'I think it will allow them to learn more about the market. It will allow them to learn more about Baidu's business,' Latitude Capital Group managing director Frank Au Kwok-yu said. Take the issue of collecting payments. In the US, customers typically pay by credit card to link their advertisements with keyword searches - a direct sales approach that allows Google to keep costs down. But the company may have trouble applying this model in China, where credit-card use is low. In a recent report, Goldman Sachs analyst Richard Ji noted that companies such as Baidu often relied on media buyers, which have extensive sales networks and place ads on behalf of small- and medium-sized businesses. Co-operation could give Google access to Baidu's sales network. 'We believe it may take years for foreign competitors to develop such local sales expertise to make their businesses commercially viable,' Mr Ji said. Google derives no advertising income from the mainland, despite its status as the second most popular search engine in China. Mr Li said Baidu had 35,000 SMEs as customers. 'As the market matures, more and more companies will come to understand how to use keyword searches to promote their products and services,' he said. Another area Google needs to improve is its Chinese-language search results. Although Google provides better coverage of web pages, inquiry results provided by portals such as Sina.com and Sohu.com are more relevant due to their longer experience in Chinese-language searches, Mr Ji said. There are benefits to Baidu as well. In addition to gaining access to Google's technology, the investment should boost its profile ahead of a Nasdaq listing reportedly planned for the third quarter. Mr Au, however, said investors would primarily focus on the fundamentals. 'Google certainly is nice from a branding perspective, but that alone will not help them get to IPO,' he said. Mr Li said Baidu earned its first profit last year, but refused to provide financial details. The paid search market is still in its infancy in China, although analysts forecast stellar growth rates in coming years. According to Shanghai-based iResearch, mainland companies spent just US$62 million last year on internet search-related advertising. This is forecast to reach $277 million by 2006. International Data Corp was more conservative with an estimate of US$20 million. However, it expects growth of 70 to 80 per cent over the next three years. Mr Li said the investment by Google and seven others would help the firm shore up its No1 market position. 'This year is our brand building year. Next year is going to be one for revenue growth,' he said. 'If we build our brand name, users will come to know about our services. As traffic increases, revenue will naturally increase.'