Baidu falls further behind among China’s biggest tech firms
August 20, 2019 Category China News Round-up, Weekly
Baidu has fallen out of the top five of the most valuable publicly traded Chinese internet companies after its market capitalization slid below that of gaming and e-commerce pioneer NetEase. After a 40% slide in its share price this year, Baidu’s market valuation stood at USD33.2 billion at the close of trading on August 14, compared with USD33.5 billion for NetEase, whose shares have risen by 11.4% in the same period. Meituan Dianping has surged 45% this year to be valued at USD46.7 billion. Baidu has seen its market valuation stagnate even as Alibaba Group and Tencent Holdings – which, along with Baidu are referred to by the acronym BAT – surged ahead as China’s internet population embraced mobile payments and shopped, messaged and sought entertainment on their smartphones. Alibaba Group had a market cap of USD421.9 billion, while Tencent was second at USD405 billion.
Beijing-based Baidu, which is the dominant search engine operator in China, has struggled as advertising income slowed with the economic uncertainties and its investments in autonomous driving have yet to yield profits. Baidu posted its first quarterly net loss of CNY327 million since its 2005 IPO in May. After the loss, Founder Robin Li called on employees to fight harder. “For senior managers, saying ‘I have tried’ is not enough and we need to make sure we win in the battlegrounds that we must win; for employees, we must spare no effort to make sure every task is executed flawlessly,” Li wrote in a memo to staff in May.
Baidu has had a stranglehold on search in China with 70% of the market, especially after Google exited in 2010. But a shift in internet usage patterns has chipped at that dominance, with the rise of self-contained super-app ecosystems by rivals like Alibaba and Tencent. A user could quite easily watch a movie, read news, shop online and order takeaway food without having to leave one of these walled communities or go to a traditional search engine. Meanwhile, new competition in search has arisen in the form of ByteDance, which owns the popular short-video Douyin app and Toutiao news aggregation app. Baidu has downplayed the prospect of new competition, stressing that it remains a dominant player in the market, the South China Morning Post reports.
China’s top 100 internet companies have beefed up research and development (R&D) spending to CNY153.87 billion – up 45% year-on-year – driving their emergence as first-tier international players in the fields of cloud computing, big data, artificial intelligence (AI) and other technologies. The 100 companies recorded a combined revenue of CNY2.75 trillion in 2018, about CNY1 trillion more than in 2017, highlighting the solid development of the industry. In the first half of 2019, the size of China’s internet market grew 17.9% year-on-year, faster than the global average. China’s top 10 internet firms are Alibaba; Tencent; Baidu; JD.com; Ant Financial; NetEase; Meituan Dianping; Bytedance; 360 Security Technology and Sina, the China Daily reports.
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