Baidu

Searching for the next big thing

Chinas biggest search engine turns to personal transport to drive prots

 



 

Mar 20th 2021 | words 584

 

 

 

 

ROBIN LI SMILED when asked at a corporate shindig in 2014 to reflect on his path to becoming, at the time, Chinas richest man. Im just lucky, he insisted. Mr Li, co-founder and boss of Baidu, a Beijing-based search engine, may have been trying to project modesty. But his words could also have been taken literally. Thanks to government censorship, Google is inaccessible in mainland China. That leaves Baidu as the unrivalled leader in Chinese search. Slowing advertising revenues, however, are now taking it down a different road.

 

Baidus search dominance is indisputable. Its average of 538m monthly active users last year was nearly six times the combined total of the next three domestic rivals. Baidus share price has tripled in a year, taking its market capitalisation to $93bn. Riding this wave of investor enthusiasm, it has filed for a secondary listing in Hong Kong, with trading set to begin on March 23rd. The firm is expected to raise around $4bn. But the steep rise in Baidus valuation might seem unwarranted. Advertising, the main source of revenue, has suffered as the pandemic forced Chinese businesses to cut marketing budgets. Adverts on Baidus main search service brought in 66.3bn yuan ($9.6bn) in 2020, 5% less than the year before.

 

Even as Chinas economy recovers advertising is unlikely to propel Baidus growth as powerfully as before. In recent years the supply of digital ad space in China has multiplied, depressing prices. Businesses can now choose from an array of platforms on which to hawk their waresfrom addictive video apps like Kuaishou to e-commerce upstarts like Pinduoduo.

 

Baidus bosses appear to recognise as much. The firm is rapidly diversifying. Last November it agreed to buy YY Live, a video-sharing and live-streaming app, for $3.6bn, in a bid to boost its presence in online entertainment and compete with the likes of Kuaishou. Baidu is also investing heavily in cloud services to keep up with Alibaba and Tencent, two bigger Chinese tech rivals. But arguably the boldest push is what the company calls intelligent driving.

 

This business contributes hardly any revenues today but holds huge long-term monetisation potential, according to Baidus new prospectus. The business has three prongs. The first is the establishment of a nationwide fleet of robotaxis powered by Apollo, Baidus in-house self-driving technology. The firm is already operating self-driving taxis in three Chinese cities, including part of Beijing. Rides are currently free but Baidu hints that it may soon start charging. It has international ambitions, too. In January it received permission to test self-driving cars in California.

 

Baidu also plans to mass-produce electric vehicles (EVs). In January it formed a new venture with Geely, a Chinese carmaker, to bring to market intelligent (if not fully autonomous) EVs within three years. By 2035 Chinas government wants every other new car sold to be an EV. The third prong allows Baidu to earn immediate revenues by selling services to Chinese carmakers, such as high-definition maps and automated-parking technology, which it has already sold to ten firms. Baidu is already a late entrant to Chinas crowded personal-mobility industry. For now, at least, investors are on for the ride. 







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Economist | Baidu turns to personal transport for growth

 


 Baidu

Searching for the next big thing

Chinas biggest search engine turns to personal transport to drive prots

 



 

Mar 20th 2021 | words 584

 

 

 

 

ROBIN LI SMILED when asked at a corporate shindig in 2014 to reflect on his path to becoming, at the time, Chinas richest man. Im just lucky, he insisted. Mr Li, co-founder and boss of Baidu, a Beijing-based search engine, may have been trying to project modesty. But his words could also have been taken literally. Thanks to government censorship, Google is inaccessible in mainland China. That leaves Baidu as the unrivalled leader in Chinese search. Slowing advertising revenues, however, are now taking it down a different road.

 

Baidus search dominance is indisputable. Its average of 538m monthly active users last year was nearly six times the combined total of the next three domestic rivals. Baidus share price has tripled in a year, taking its market capitalisation to $93bn. Riding this wave of investor enthusiasm, it has filed for a secondary listing in Hong Kong, with trading set to begin on March 23rd. The firm is expected to raise around $4bn. But the steep rise in Baidus valuation might seem unwarranted. Advertising, the main source of revenue, has suffered as the pandemic forced Chinese businesses to cut marketing budgets. Adverts on Baidus main search service brought in 66.3bn yuan ($9.6bn) in 2020, 5% less than the year before.

 

Even as Chinas economy recovers advertising is unlikely to propel Baidus growth as powerfully as before. In recent years the supply of digital ad space in China has multiplied, depressing prices. Businesses can now choose from an array of platforms on which to hawk their waresfrom addictive video apps like Kuaishou to e-commerce upstarts like Pinduoduo.

 

Baidus bosses appear to recognise as much. The firm is rapidly diversifying. Last November it agreed to buy YY Live, a video-sharing and live-streaming app, for $3.6bn, in a bid to boost its presence in online entertainment and compete with the likes of Kuaishou. Baidu is also investing heavily in cloud services to keep up with Alibaba and Tencent, two bigger Chinese tech rivals. But arguably the boldest push is what the company calls intelligent driving.

 

This business contributes hardly any revenues today but holds huge long-term monetisation potential, according to Baidus new prospectus. The business has three prongs. The first is the establishment of a nationwide fleet of robotaxis powered by Apollo, Baidus in-house self-driving technology. The firm is already operating self-driving taxis in three Chinese cities, including part of Beijing. Rides are currently free but Baidu hints that it may soon start charging. It has international ambitions, too. In January it received permission to test self-driving cars in California.

 

Baidu also plans to mass-produce electric vehicles (EVs). In January it formed a new venture with Geely, a Chinese carmaker, to bring to market intelligent (if not fully autonomous) EVs within three years. By 2035 Chinas government wants every other new car sold to be an EV. The third prong allows Baidu to earn immediate revenues by selling services to Chinese carmakers, such as high-definition maps and automated-parking technology, which it has already sold to ten firms. Baidu is already a late entrant to Chinas crowded personal-mobility industry. For now, at least, investors are on for the ride. 







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