Chinese Search Engine
Promising Growth Opportunity
In March 2015, Baidu, the powerhouse Chinese search engine, ceased its search engine operations in Japan. As it turned out, they had not even made any updates to their index in more than 2 years, according to an interview they did with TechinAsia.
What would make such a dominant search engine pull out of what seemed initially to be a promising growth opportunity?
When Baidu first launched in Japan back in 2007, their goal was to become one of the two most commonly used search engines in the country. Their strategy was to be “very patient,” according to Baidu CEO Robin Li. Yet after eight years of trying to penetrate the Japanese market, little headway had been made. Thus, they eventually decided to cut their losses and move on.
Which countries are they targeting now? The company has been operating in Brazil since 2014, and they are conducting beta testing in Egypt and Thailand. The country where they are making their biggest push, however, is actually Indonesia, and for good reason: according to McKinsey, by 2030 the Indonesian economy will have risen to be the seventh largest in the world, beating Germany and the U.K. As the world’s fifth most populous country (with 250 million people), Indonesia is ripe for growth.
So despite the fact that Baidu does not even have a search engine running in the local language, the company is investing heavily in Indonesia as a major component of their business growth strategy
Baidu’s approach in Indonesia is a novel one; they actually chose to focus on mobile first and foremost. In addition, they have brought in apps like the Baidu Browser that were a huge hit in China and invented new local tools as well.
Within four months of opening their first Indonesian office in Jakarta in September 2013, Baidu’s PC Faster software, which provides both security and optimization, was being used by 3 million people. The DU Battery Saver, an Android app that helps users optimize their smartphones’ batteries, is their biggest success story so far – it has been downloaded by over 14 million users!
In the United States, of course, Google is known for being the dominant search engine in the market and for sponsoring all sorts of tech industry conferences and events. Yet in Indonesia, it is Baidu that has the stronger presence in this area. In fact, at the 2015 Echelon Indonesia conference, Baidu was the biggest sponsor, and Google was not there at all. Baidu took the opportunity to use the conference as a platform to publicize their Mobomarket appstore, which offers over 600,000 local apps for Android devices.
Do not be mistaken, though – Baidu is not yet taking on Google head-on as they do not operate a local search engine in Indonesia at this time. By emphasizing mobile most heavily, Baidu is positioning themselves to be the largest player in that space, which will be the primary or even only means of Internet access that many Indonesians will ever own. To this end, Baidu is focusing their development initiatives on projects that will have the greatest impact for the local user base, and this localization will be a key factor in their long-term success. As a part of this focus, the company is establishing a reputation for conducting research on mobile device use in Indonesia, attending startup events where they can push their local apps, and creating partnerships with local universities.
It is too early to know if Baidu has unlocked the key to success in the Indonesian market, but their strategy reveals three key points about Indonesia:
1. Right now only 24% of Indonesians have ever accessed the Internet, but that statistic is rapidly changing, and Baidu is prepared to take the throne as the most widely used search engine in the country.
2. The fact that Baidu has chosen to operate only in the mobile sector demonstrates the critical importance of mobile.
3. Although iPhones are an aspirational product in Indonesia, one that demonstrates one’s wealth and success, Baidu is only focusing on Android. Other companies seeking to enter the Indonesian market would be well-advised to do the same.
The bottom line: Baidu seems to be on the path to dominance in the growing Indonesian market. Taking a leaf out or two of our their book will likely benefit other companies looking to expand into the country.