Net Search in China: It's a Race
"That race is getting more exciting every day. Microsoft's MSN in early January launched a test version of its Chinese-language search engine. On Jan. 24, Google started offering its search engine from servers inside China for the first time, augmenting a service it had run on U.S.-based computers. Nasdaq-listed Sina.com, China's most popular portal, used to outsource its search to Baidu but last year launched its own service, called iAsk. And Sohu.com, another Beijing-based, Nasdaq-listed portal, has done the same, with its new Sogou [the name means Search Dog] drawing growing numbers of users.
Why the interest? China's online population keeps growing, It now stands at 110 million, up 18% from a year ago. And while the market for search ads is still puny -- just $130 million, or less than a third of online advertising, and about 1% of total ad spending in China -- it grew by 88% last year, Morgan Stanley analyst Richard Ji estimates. For the next three years, the market will likely expand by more than 50% annually as small and midsize businesses turn to the Net for advertising, Ji predicts. Search "will outgrow every other online business" in China, he says. "There is huge demand." "
"While Baidu is the leader for now, and other Chinese players are coming on strong, Yahoo's biggest threat will likely remain Google. The $470 million that Morgan estimates Google spent on research and development last year dwarfs Baidu's $4 million. "In the search business, technology is more important," says Charles Chao, president of Sina.com. "I wouldn't be surprised if Google does much better in the future." Whatever the outcome, expect to see plenty of action in the race for search in China."
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