BizChina

Domestic search firm Baidu Inc could be the biggest beneficiary of a possible pullout from China by Internet major Google, leading industry experts said yesterday.

The NASDAQ-listed Baidu already dominates the Chinese search landscape and it has signaled its intentions to spread wings, even before Google hinted at a pullout.

The California-based Google could see an exodus of advertisers from the Chinese mainland and see them switching to Baidu, something that could strain revenues in the long run for the US firm, experts said.

"Google may get applauses from many for its stance," said Li Zhi, an analyst with research firm Analysys International. "But its advertisers may not be convinced, even if it buries the hatchet with the government."

She said if Google exits China, Baidu would have a near monopoly of the market in the short term.

The world's largest search engine said on Wednesday that it may close its China business if the government does not allow it to provide uncensored results in its Chinese version website Google.cn.

Read more on Google's loss could be Baidu's gain

It's easy to give up if you've already lost the battle. And Google is doing just that in China. Eric Schmidt's move to quit offering a censored Google.cn search engine to the Chinese market has been read by idealists as the right thing to do. But it is first a business decision.

Even though Google's market share climbed from 15% in mid-2006 to 31% today, the company had hoped for a bigger share by now. Kai-Fu Lee, Google China's former president, told me in 2006 that Google not only wanted to have a competitive product to Baidu's, the local search leader, but a superior product. This didn't happen: Baidu has only increased its market share, going from 47% in mid-2006 to 64% today. That's a big lead.

Baidu, started by China-born entrepreneur Robin Li in late 1999 just as Larry Page and Sergey Brin were cranking up Google in Silicon Valley, understands the local Chinese market better than Google's Mountain View team.

Beijing Tongrentang Group Co, a major traditional Chinese medicine maker, announced Thursday its 2009 net profit rose 16 percent to 800 million yuan ($117 million) from a year earlier.

Its sales exceeded 10 billion yuan for the first time, an annual increase of 12 percent.

The major performance indicators have been growing at double-digit rates for 13 consecutive years, said Lu Jianguo, the group's vice Party chief.

"It marks a historical breakthrough since the establishment of the company in 1669," he said.

Suzhou Industrial Park (SIP) in Jiangsu province will focus on international competitiveness with a modern and international urbanized area combining information innovation and an eco-friendly environment.

Following the Chinese government's goal to start a new decade with an emphasis on sustainable development and new technology, SIP is making efforts to forge the park into a national demonstration area for industrial transformation.

According to Ma Minglong, a member of the standing committee of the Suzhou Committee of Chinese Communist Party and secretary of SIP Party Working Committee, since SIP's establishment 15-years ago as a pilot area and demonstration zone for reform and international cooperation, the site aims to combine the experience of Singapore with its own features to set up its image as an advanced manufacturing base in China.

In the 1990s, SIP greatly attracted foreign-funded enterprises and in the early part of the 21st century, it optimized and upgraded its high and new technology industry. In recent years, the SIP rapidly made multiple development of its modern service and greatly contributed to the local economy of Suzhou in Jiangsu province.

"These have consolidated our leading status among the development zones in China," said Ma. "However, industrial transformation is key to the success in keeping its status as a leading flagship national industrial park."