Baidu.com Inc (NASDAQ: BIDU), the world’s largest Chinese language search engine, has begun a campaign to establish websites for half a million Chinese small- and medium-sized enterprises (SMEs) for free, CEO Li Yanhong said. “The global financial fiasco, in a sense, is an opportunity for SMEs to go online,” said Baidu vice president Shen Haoyu. “We are going to invest roughly RMB100 million in training SMEs with IT know-how so that they can be better prepared to weather economic hardship.” The Internet has become China’s largest trade platform after its cyber population rocketed 125 times to 253 million in 2007 from just 2 million a decade ago.

Source: http://www.sx.xinhuanet.com/rdsp/2008-12/14/content_15174232.htm

There is some very interesting news hitting the streets today. The Chinese blogosphere is heating up with the news that  Sina, one of the biggest Chinese portals have acquired Focus Media, a media company which operates the largest outdoor advertising network in China.

Focus Media delivers advertisements using LCD televisions located at the elevator waiting area of business and commercial building, and it also owns the largest Chinese Internet advertising agency Allyes. The deal is reported worthy of around $1 billion and the detail is expected to be disclosed later tonight.

I expect over the next few days we will get much more information coming out about the deal and the impact we will see in the Internet advertising space… also I guess speculation about the size of the purchase- reportedly $1 Billion…  Anybody know more about this deal?

The news for Baidu has continued to be negative in the past weeks and Internationally this seems to be gaining more traction. It was reported in the UK that Baidu had sacked staff over paid for search listings related to the medical license scandel. The Guardian reports Baidu has dropped the ads of four clients after finding out their medical licenses were false. According to the Guardian, this has resulted in Baidu’s ad revenue dropping ten to fifteen percent, plus the release of several ad representatives who have allegedly helped these false medical practices gain top ranking in Baidu.

Baidu’s stock fell 60% on the news that Baidu allegedly allowed unlicensed medical services adverse for medical practices. Robin Li, Baidu’s chief executive told Xinhua:

Baidu employees who are found to have been involved in the scandal will be penalized… We have already fired people who helped fabricate documents for unlicensed suppliers.

We have removed the key words of all four clients mentioned in the report and have begun to double-check the licenses of all other hospitals and pharmacies on our client list.

One searcher told the China Central Television that he spent 10,000 yuan (~$1,500 us dollars) at one of those clinics. He later found out the procedure did not work and he had to go to a public hospital to fix the issue for only a 100 yuan.

I doubt Google validates the medical licenses of doctors who advertise for medical terms. But at the same time, this would not necessarily be a legal issue for Google - or would it? To be perfectly honest, I am not sure why Baidu is taking such heat for this? Maybe because they place their paid ads directly into the organic results?

I would be interested in your comments and views…

Dr Mathew McDougall from SinoTech Group (www.sinotechgroup.com.cn) was speaking at the SMX about Search Marketing in China. At the event, the talk was focused on the positive growth in Internet users in China. Collectively, the speakers were promoting that it is now right for marketers to take the plunge and launch digital campaigns in China (search, social etc) The various speakers outlined  positives and negatives for search marketers in China. These positives and negitives were nicely consolidated by Chris Sherman in his post on Search Engine Land. (Listed below for convienience).

Positives:

• China is of the largest markets in the world, with the most online users of any country (~250 million and counting)
• Increasing use of search engines by Chinese internet users
• Comparatively inexpensive options for search marketers in relation to other markets in the world
• Relative lack of sophisticated competition; relative ease of capturing top positions in both organic and paid search result listings

Negatives:

• Relative complexity of Chinese language (and multiple dialects) requires sophisticated knowledge and/or strong partnership with local marketing experts
• Lack of transparency on the part of market leader Baidu requires good relationships with company reps or agencies with good connections
• Lack of maturity in E-commerce poses challenges for direct-response or retail oriented search marketers

In the presentation by Dr McDougall, he spoke about companies now establishing search marketing campaigns in China and increasing looking to expand their budgets and the number of keywords being managed. He used a case study to highlight how one consumer electronics brand is now doing campaigns that have tens of thousands of keywords and there for needs tools and technologies to establish, bid, manage and monitor results/campaigns.

Overall, a great indication that search marketing is alive and well in China. If anyone else was at the event then would be interested in your views and comments.

The China market, although large, still has low penetration rates and this is an excellent indicator for future growth. According to the Survey Report on Online Shopping in China 2008 that released by China Internet Network Information Center, stated the total amount of online shopping in 19 big cities in China had reached CNY16.2 billion in the first half of 2008.

*These cities are Chongqing, Tianjin, Harbin, Changchun, Shenyang, Dalian, Nanjing, Hangzhou, Ningbo, Xiamen, Jinan, Qingdao, Wuhan, Guangzhou, Shenzhen, Chengdu and Xi’an

Source: CNNIC June 2008 online shopping research report