The Chinese Internet landscape is dominated by a handful of companies. They are fighting one another to consolidate their positions to capture the greatest opportunity of them all — the Chinese web user. In our lifetime, I feel that China offers investors the greatest investment opportunity. The best company to invest in to capture this growth in China is Baidu.com, Inc. (ADR) (NASDAQ:BIDU).
The best way to play Chinese internet growth is through China’s Google Inc (NASDAQ:GOOG), Baidu. In 2012, China’s internet population stood at 538 million. An estimated 75% of these users searched the internet using Baidu. By 2015, the number of internet users in China is expected to reach 800 million people. This is a huge opportunity for investors!
Baidu continues, in many ways, to operate from the Google Inc (NASDAQ:GOOG) playbook. Baidu.com, Inc. (ADR) (NASDAQ:BIDU) just announced that it would pay $370 million for the online video business of PPStream and merge it with its existing video platform, iQiyi. With this acquisition, Baidu will have its version of Google’s popular YouTube video service and China’s largest online video platform. Now, Baidu.com, Inc. (ADR) (NASDAQ:BIDU) can incorporate its search advertising platform into these videos just like Google Inc (NASDAQ:GOOG) does with YouTube.
With the acquisition of PPStream, Baidu would be able to increase its mobile presence. Currently, 130 million devices are running its mobile app. Combine that with iQiyi’s 200 million mobile users and you have 330 million Chinese mobile customers, or the entire U.S. population, on Baidu’s network.
Baidu and Intel’s partnership
Baidu and Intel have partnered together for a joint innovation lab in China. Together they will create software for the Chinese mobile internet market. Baidu.com, Inc. (ADR) (NASDAQ:BIDU)’s developers will have access to mobile devices and PCs powered by Intel chips. Baidu will use this partnership to strengthen its mobile offerings and focus on cloud computing.
This is a strategic partnership for both companies. Intel will get a foothold in China with China’s leading search engine. Baidu will gain technological know-how from the world’s leading chip company. The partnership is a win-win for both companies.
Qihoo 360 Technology Co Ltd (NYSE:QIHU) is rapidly growing in the Chinese search space with 12.5% of the market, up from nothing in a short amount of time. Qihoo 360 Technology Co Ltd (NYSE:QIHU) is relying on Google to monetize its search engine while Baidu.com, Inc. (ADR) (NASDAQ:BIDU) monetizes its own. Qihoo 360 Technology Co Ltd (NYSE:QIHU) lacks Baidu’s presence in the mobile space and doesn’t have the online video presence like Baidu does now with its latest acquisition of PPStream.
Sohu.com Inc (NASDAQ:SOHU) owns the Sougou search engine in China. However, its Sougou search business only makes up 12% of its revenue. There has been speculation that Qihoo or Baidu.com, Inc. (ADR) (NASDAQ:BIDU) may make a bid for the Sougou search engine. However, integrating Sougou into either one’s search engine would not be an easy task. Sohu.com Inc (NASDAQ:SOHU)‘s main focus is its online portal, similar to Yahoo! Inc. (NASDAQ:YHOO)