The Chinese Take On Google In Japan

Stocks: (BIDU)(GOOG)(YHOO)

Baidu, the Chinese search engine company, is moving into the Japanese market Yahoo! and Google have the largest market shares in the Japanese market while Baidu gets about 50% of the search ad dollars in China followed by Yahoo! and Google.

Yahoo! and Google have little to fear. Baidu is a relatively small company because online search revenue in China is only about $250 million. The market in Japan is closer to $1 billion.

And, Yahoo! and Google have too large a lead. The Yahoo! site in Japan, which is run with large wireless and DSL company Softbank, is the most visited site there.

The move may actually end up being a costly diversion to Baidu, which, although No.1 in China, still has to keep a lead of the much largest US search firms. If they up the ante in China as Baidu moves into Japan, Baidu may find itself spread too thin when its needs to defend its home turf. Baidu has only $138 million on it balance sheet compared to over $10 billion for Google.

Baidu’s stock trades near a 52-week high, but, a failure in Japan could jeapordize that. 

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writea about.

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