Baidu founder Robin Li warns new businesses are still bleeding cash, looks to sharpen company’s focus on profits

The Baidu co-founder and chief executive said many of the company’s new businesses are still loss-making operations
The internet and AI giant has struggled to eke out a profit from high-profile investments such as autonomous driving

Baidu

Che Panin Beijing

Published: 7:00am, 7 Jan, 2023

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Robin Li Yanhong, co-founder and chief executive of Baidu, has warned that the company is burdened by certain loss-making enterprises, which makes it imperative for the Chinese internet and artificial intelligence giant to sharpen its focus on profits.

“Many of Baidu’s new businesses are losing money,” Li said in a speech in December that was the subject of an internal memo seen by the South China Morning Post.

“After a long time, people feel losing money is justified,” he said, referring to those business activities. “Many then forgot why we even lost 1 billion yuan [US$145 million] or 5 billion yuan a year to do this.”

Once one of the most valuable Chinese tech companies, on a par with Post owner Alibaba Group Holding and Tencent Holdings, Baidu has struggled to eke out a profit from high-profile investments such as autonomous driving. Recently, Baidu retired its on-demand local services platform Baidu Nuomi to conclude an eight-year attempt to carve out a foothold in a market largely dominated by Meituan.

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“In the short term, losses can be blamed on high inputs for fast growth,” Li said. “But in the long run, this won’t work.”

He indicated that the company must now judge its performance by gross revenue, operating revenue and cash flows, rather than its top-line revenue.

Li also touched on Apollo Go, the autonomous ride-hailing service that offers robotaxi rides without human drivers present. Total orders of robotaxis are currently more important than revenue, he said.

Most robotaxi services in Chinese cities are currently made available at certain traffic-restricted areas. The cost of using these robotaxis amounts to just a fraction of the fare from an on-demand service with a human driver.

The contents of Baidu’s internal memo were first reported by Chinese tech media 36Kr.

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Li’s warning reflects concerns shared by all of China’s Big Tech companies, following a series of crackdowns that have disrupted their industry and wiped out tens of billions of dollars from the value of many companies.

Beijing’s zero-Covid-19 policy, which was relaxed last month after being enforced for three years, has also hammered consumption across the country.

Tencent founder, chairman and chief executive Pony Ma Huateng, for example, said in an internal town hall meeting late last month that the company must focus on core businesses in 2023, while getting into a habit of cutting costs and finding core areas rather than seeking expansion and scale.

Still, Baidu significantly narrowed its net loss to 146 million yuan in the third quarter last year, from 16.6 billion yuan in the same period in 2021.

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