Baidu.com Advertising business
--going to EU with V2Future
By: Ning Liu
Student Number: 10415238
Thesis Supervisor: Prof. Dr. John B Cullen
Course: 2013-2014 MBA Fulltime Amsterdam Business School
Index
Executive Summary
... 3Internet marketing/E-commerce
... 5Introduction of Baidu and V2Future
... 7Literature Review
... 8V2Future with Baidu：A Successful Step
... 12V2Future’s future growth after cooperating with Baidu
... 18Baidu’s Internationalization for EU
... 22Study Summary
... 31Executive Summary
The paper analyzes Baidu.com SEM advertisement sales business out of China. Baidu.com is the giant in China Internet Market and is regarded as the “Chinese Google”. However the strongest business for Baidu is their Chinese language based search engine, which means they are very strong but only strong in Chinese market. The problem Baidu is facing is how to define their internationalization strategy.
There are 2 approaches for Baidu to develop their international business. 1. Trying to attract foreign companies who wants to focus on Chinese
consumers, to invest ads promotion in Baidu’s Chinese website
2. Trying to set up offices overseas and build local website in the local markets, so that Baidu has the capability to compete with their local competitors (Google or anyone else)
At the moment Baidu is actually taking the both way. On one hand they start to expand their business to attract customers out of China through overseas agencies; on the other hand Baidu is also starting to be prepared to compete their competitors out of China.
Through this paper, I will provide the background information introduction on the online marketing/e － commerce status in both European market and Chinese market, and the comparison of the similarity and difference in both of the markets. My company project studies outcome will help to analyze how Baidu should overcome the international investment barriers by providing framework through various strategy formulation principles, strategy theories, and strategy frameworks. The paper will also give an insight on which market
Baidu should start to compete globally from the data that the company project provided and how V2Future should develop the internet related business
Internet marketing/E-commerce
Online Marketing was not as fancy as it is even back to 5 years ago. Now everywhere on internet you can find the signs of online marketing. A pre-roll before a YouTube video, a pop-up ads in your browser, an ads link in your mobile app, or, most commonly, a promotion link in Google when you try to search something.
The fast development of online marketing is because of the fast development of E-commerce.
At the moment, E-commerce in China is developing even faster than that in Europe, as well as the rest of the world.
(Source: V2Future internal document—The Short Cut from Alps to Great Wall, quoted from McKinsey Global Institution)
Because of this fast development speed, as well as the great market potential in China (see the picture below), more and more western companies are now
(Source: V2Future internal document—The Short Cut from Alps to Great Wall, quoted from McKinsey Global Institution)
Baidu SEM product is a search engine very similar comparing with Google, but particularly strong in the Chinese language.
After launching more than 10 years from the year of 2000, Baidu.com has become the No.1 choice to make investment for online marketing for any company who wants do business in China.
That is the main reason why Baidu is in belief that now is the good time to sell their services to overseas customers.
Introduction of Baidu and V2Future
Baidu, Inc. , incorporated on January 18, 2000, is a Chinese web services
company headquartered in the Baidu Campus in Haidian District in Beijing. Baidu offers many services, including a Chinese language-search engine for websites, audio files, and images. Baidu offers 57 search and community services including Baidu Baike (an online collaboratively built encyclopedia) and a searchable, keyword-based discussion forum. Baidu was established in 2000 by Robin Li and Eric Xu. Both of the co-founders are Chinese nationals who studied and worked overseas before returning to China. In May 2014, Baidu ranked 5th overall in the Alexa Internet rankings. During Q4 of 2013, it is estimated that there were 5 billion search queries in China per day of which Baidu had a market share of 65.6%. China's Internet-search revenue share in second quarter 2011 by Baidu is 76%. In December 2007, Baidu became the first Chinese company to be included in the NASDAQ-100 index.
Baidu provides an index of over 740 million web pages, 80 million images, and 10 million multimedia files. Baidu offers multimedia content including MP3 music, and movies, and is the first in China to offer Wireless Application Protocol (WAP) and personal digital assistant (PDA)-based mobile search.
V2Future B.V. The company project I’m doing is with a Dutch company called
V2Future B.V. Founded by a group of Chinese experts with European business experiences. Beginning of the year 2014, V2Future signed an official partnership contract with Baidu.com, became the only official agency in European area. How to gain the trust from European customers and help them to understand/adapt to Chinese online marketing is the key to win the business.
Literature Review
In this paper, the analysis of business will be around 3 topics—International Business & Competitive Strategy
International Business-
Challenges of international business: CAGE
(Source:Pankaj Ghemawat, (2001) Distance Still Matters, TOOL KIT September, pp.140)
Distance between two countries can manifest itself along four basic dimensions: culture, administrative, geographic, and economic. The types of distance influence businesses in different ways. (Pankaj Ghemawat, Distance Still Matters, 2001)
(Source: ABS MBA International Business 2013-2014 course material by Alan Muller)
Competitive Strategy
Business Portfolio—the BCG model
Individual businesses can have very different financial characteristics and face different strategic options depending on how they are placed in terms of growth and relative competitive position. Business can basically fall into any one of the four broad strategic categories.
(Barry Hedley, Strategy and the “Business Portfolio”, 1977 )
Porter’s “Five forces”
(Source: Michael.E.Porter, (1979) The Five Competitive Forces That Shape Strategy, Harvard Business Review March-April)
Porter five forces analysis is a framework to analyse level of competition within an industry and business strategydevelopment. X`
(Michael.E.Porter, The Five Competitive Forces That Shape Strategy)
Resouce-based view
The history of strategic management research can be understood as an attempt to “fill in the blanks” created by the SWOT framework. However the SWOT framework tells us that environmental analysis—no matter how rigorous—is only half the story. A complete understanding of sources of competitive advantage requires the analysis of a firm’s internal strengths and weaknesses as well.
In general, when a firm’s resources and capabilities are valuable, rare, and socially complex, those resources are likely to be sources of sustained competitive advantage.
V2Future with Baidu：A Successful Step
When it was founded, V2Future positioned itself as a bridge/portal between China and Europe, providing business consultancy to companies, those who want to invest in EU market from China as well as those who want to invest in Chinese market from EU.
From the analysis of competitive strategy, the result convinced me that V2Future would be successful in selling a Chinese search engine to Western world? Their competitive advantage will definitely help!
From the RBV by Barney, V2Future has a lot of resources, which are the keys of their future success.
The HR resources of V2Future is their most important advantage doing Baidu business, all the consultants of V2Future are Chinese experts who have been working in Europe for more than 5 years. They are with Chinese background and culture, and understand the way that European companies do business. While search engine is some product that with strong relation to the language and the culture, there are not too many competitors have a group of people like V2Future do.
The company’s location. V2Future is selling Baidu services, however comparing most of it’s competitors, V2Future is the only one which is located in Europe. The customers will have less communication/time difference issue with V2Future than with other companies. At the mean time, located in EU means V2Future is also fitting with the European law instead of Chinese law, which is most of the time the case for other Baidu Agencis. So V2Future gets the location advantage in FDI mode comparing to it’s Chinese competitors.
The relationship with Baidu is the other crucial point. The CEO of V2Future has a great personal relationship with the MD of Baidu international business unit. This is one of the reason one V2Future became the first official oversea agency of Baidu, also the only one in Europe. It’s like an unwritten exclusive deal for V2Future to do the Baidu business, which almost means that V2Future has no competitor in the market for their Baidu business.
Technical capability is the other point that V2Future is different comparing other competitors. V2Future has a technical team in China in charge of the delivery of the services which they sell to the customers in Europe. This is very rare if we look at other online marketing agencies of Baidu. This team will take care the customer’s account opening, SEM campaign management, report providing as well as some other value added services, eg. Hosting customer’s Chinese landing page, landing p
Also the product of Baidu for Chinese market is unique to the European clients.
(Source: Baidu internal document – Baidu international business intro media kit 2013)
From the picture above we can see that Baidu occupied nearly 80% of the Chinese search engine market, regardless the rest market are mostly shared by the competitors with a preinstalled/bundled deal with the hardware vendors. In other words, if a company wants to do business in China and needs online marketing, Baidu is the first choice and Baidu search engine is almost the only choice for SEM.
All of the resources mentioned above (HR, location, Baidu relationship as well as the Baidu product/services) are valuable, rare and socially complex for competitors to imitate, so they are the basic elements to ensure the competitive advantage of V2Future for Baidu business and their long term success.
V2Future in the business. As mentioned above, Baidu is dominating the Chinese search engine market, which makes V2Future can be very aggressive in front of it’s customers. So the bargaining power of the buyers is low; among the existing competitors, it’s very difficult for them to compete because V2Future has experience in Europe, and more importantly, located in Europe, most of the existing competitors are in China, very few of them are in the southeast Asia or America, none in Europe, which means the Rivalry of the existing vendors is low; the good relation with Baidu and the unique HR advantage makes the threat of the new entrants is low; and because of the big market share in China, as well as the high cost efficiency rate of internet marketing comparing with the traditional media tools (TV, radio, magazines. Etc. ), the threat of substitute products or services is low as well. However, because of the high dependency on Baidu product and services, the bargaining power of Baidu in front of V2Future is high, this is the only potential risk according to Porter’s theory.
From BCG model, we can definitely attribute Baidu business as the star product for V2Future to sell. It’s new, marketing is growing so fast, no real competition in the market, V2Future just need to focus to think how to quickly gain profit out of the business, and once it attract customers’ investment, the investment would not stop and be continues. With the successful cases and reputation, it’s just a question of time that when this Star product will turn into a Cash Cow.
Even with all the competitive advantage explained above, we can make sure that V2Future is an agency with enough quality to sell Baidu business outside China; however, how can we make sure that Baidu ads in China is attractive enough for the foreign companies who wants to do business in China? For this topic, we have to go back to the Chinese internet environment.
will absolutely need more local help than they need normally when the investment happens in the other countries.
(Source: V2Future internal document—The Short Cut from Alps to Great Wall)
As we know that Google/Youtube/Facebok/Twitter, normally the most popular network platforms, are forbidden the accessibility from China by the Chinese government. This is partially because of the political reason, also due to the local protection of the internet industry in China.
So we can see that youku.com is the replacement of youtube.com in China; Renren.com is the replacement of facebook.com; Weibo.com is the replacement of twitter.com in China and Baidu.com is the replacement of Google.com in China.
Most of the current European customers are not so familiar with the Chinese internet environment, V2Future together with Baidu need to educate them to
let them realize how important the product and service V2Future is providing for their Chinese business.
What V2Future needs to keep on doing is build relationship with other companies like they have done with Baidu, so they can provide one-stop-shop as the “Chinese Internet Solution Provider” to their European customers.
V2Future’s future growth after cooperating with Baidu
V2Future has a very nice start of their business to cooperate with Baidu. However, during the business communication with their existing customers they still find some difficulty of selling their services to match all customers’ requirement. This will prevent the long-term ambitious growth of V2Future, what V2Future should do to transfer their current competitive advantage into their sustainable growth?
As we mentioned, the business of Baidu is dominating in the search engine market. However, there are a lot of other platforms in China to form the how eco system of Chinese internet environment.
Here mentioned above are the biggest ones, especially Weibo.com (Chinese twitter) and Wechat (Chinese facebook + whatsapp). A lot of customers want to do online promotions other than Baidu.com SEM. Weibo and Wechat are the other 2 choices among the many.Also, Youku.com can be as the Youtube in China, taobao/Alibaba is the Chinese Ebay. With all these options, V2Future should trace closely and try to build close connections with the companies mentioned above. So that V2Future can offer a bundle of services for their customer to enter Chinese online marketing with choices among Baidu, Wechat, Weibo, Youku as well as Alibaba.
Moreover, the latest trend for internet marketing is to go to mobile internet. Apple and Adroid are the top 2 platform for mobile internet marketing; however, the platform of Android is a bit mass in China (again because of Google is officially not in China). V2Future should build proper partnership with certain online marketing experts in the domain of mobile internet so that they can provide end to end services to their customers in Europe.
Currently, V2Future can only offer customer one single solution that’s Baidu.com
With the analysis above, V2Future should develop itself into a company who can provide multi solutions to enable their European customers touch Chinese online marketing platform, ideally as below
In this sense, on one hand V2Future can match the different request from the customers, on the other hand it will strengthen their bargaining power in front of their current supplier — Baidu because of the other choices they will have. This will create a lot more opportunities and to support their sustainable competitive advantage in the market.
of the 3 key issues on FDI—Trade, EU companies can adjust the trading strategy and execute right away because everything is on internet; Exchange Rate, with the service of V2Future, the exchange rate is real time (or at longest 2 weeks time) and taking the EU/China economical/political environment into consideration, the risk is relatively low; Investment, the investment on internet services is much smaller than opening an entity in a foreign country.
Also, this model helps the EU companies minimize the negative influence of distances which defined in the “Cage: Distance Framework”. The influence of culture distance is one of the important to be noticed, the different languages and ethnicities might cause some problem; the influence of administrative distance can be overcomed by the nature of the company—a small bunch of Chinese professionals with EU experiences they can take care of the weakness brought by politic/government/institution and sometimes even turn it into competitive advantages; geographic distance is easily to be taken out of consideration because it is internet business, time zone matters more in this case; economical distance is also important for the executive of the company, because the cost in EU will definitely be much higher than in China in each/every way. So in General, V2Fuutre needs to focus the influences more on Culture/Economical Distance.
As long as V2Future can keep their pace with the Chinese internet tech development and help their EU customers adapt their actions/advertisement more fitting the Chinese consumers’ tastes, V2Future will keep gaining success out of this strategy.
The last question here is—
China is such a big and attractive market and Baidu is so strong, why do they need V2Future? The reasons are as below observed.
1. Baidu’s resources are not ready to attract customers to China from all over the world. They don’t have experts who have enough knowledge and experience to deal with overseas customers. A ridiculous case is – An Italian customer tried to contact Baidu from mid 2013 to invest on Baidu SEM, however till mid 2014, after 12 months, they still cannot open their Baidu Account to start with their SEM campaign in China.
2. The IT system is not ready for overseas customers. Baidu is a huge company in the Internet domain even we look from a global point of view. However in such a big company, every single IT system are only in the language of Chinese. To switch all these systems into English would be a large project which will cost a lot time, money and resources. Baidu doesn’t want to do so when they didn’t get enough benefit from the overseas market and not sure if it’s worthy for them to do. More importantly, the Chinese market is already big enough and they are dominating. Without competitors with enough quality bringing enough threats, they don’t have motivation to invest for the improvement.
3. Almost all the customers are investing in Baidu through agencies, however, the currently agencies of Baidu are all located in China, they don’t have qualification to deal with international neither.
So, the fastest and most cost-efficient way of Baidu for the short period to attract overseas customers is that they should focus more to find partners like V2Future, which is with good service quality and does not cost Baidu too much resource.
And, for Baidu, V2Future’s experience can be easily copied with Baidu’s other partners in other regions all over the world.
Baidu’s Internationalization for EU
From Baidu’s perspective, cooperating with V2Future is only for attracting EU companies to invest in Baidu China. The potential market is huge and the road is long. Baidu should first find more partners like V2Future in different regions all over the world, so that the sales network can be spread fast; then build strong supportive system to the oversea customers (currently the resource in this part is very small comparing with Google)
Baidu’s steps to go to EU—How to do FDI?
Baidu’s internationalization strategy is not mainly focusing on attracting foreign companies to invest in their Chinese search engine, instead, they want to step out of China and compete with Google or other competitors in other markets step by step.
This is what Baidu doing-- they set their office in Indonesia, Thailand and Brazil, where the countries with huge population but no-English speaking, and created local sites in those countries;
But Baidu understands that this could not be the way how they should expand in EU market because Google is too strong in these markets.
The problem with the act of searching in China has more to do with the language than with search technology. In English or most of the EU languages, we know that there is a difference between “My Mom is good.” vs “My Mom is great.” A search engine tries to understand the intent and can usually do an adequate job in interpreting that intent and providing the results.
It’s not perfect, but because we are a pretty forgiving language, we figure it out pretty easily. But what if in English, we had 15 different words for “Mom” and most of those we never heard of because they are spoken in different areas of the country? Now add 15 different variations of “good” and “great”. A simple phrase can quickly turn into hundreds of different interpretations and therefore hundreds of very different search results. The written Chinese language doesn’t have “standards”. This is one of the reasons why Chinese websites have so many links in it and so many sites have numbers in them…makes things a hell of a lot easier to traverse.
So these are the 2 potential ways where Baidu can get into EU market with success—
1. Going Mobile
In China, 47.5 percent of web traffic is mobile, compared to just 34 percent in Europe. With Google struggling to gain its footing in China, Baidu is stepping up to take the position of number one search engine in Asia.
(Source: Michael Bonfils, Why Baidu’s International Mobile Strategy Will Change Everything, 2015)
Partnering with international startups, wifi providers, mobile device makers, and luxury carmakers – Baidu’s strategy is to widen its know-how and potential market reach without investing in in-house innovation, unlike Google. In the race with BAT, Baidu is innovating like the Chinese do – investing in startups to spark creativity.
Going to Baidu chairman Robin Li’s comment, Baidu sees the potential for mobile and is building its business on serving the mobile consumer across education, financial, traveling, and health spheres. By investing in these verticals Baidu is boosting its brand image and value.
But with Google making 95 percent of its revenue from advertising and Baidu only 50 percent, Baidu’s investments in startups will help to spread out its revenue model. If Google is the world’s dominant search engine, then Baidu is
on its way to be the Asian world’s mobile search provider.
It is true that Baidu cannot (yet) compete with Google directly in the PC end Search engine market, but considering the popularity and maturity level of Mobile internet in China, we have enough reason to trust Baidu can survive in EU market with their mobile end product & solutions
2. Focusing on Tourism related industries
The development of travel flow in the last few years reveals China’s immense pent-up demand for travelling and a growing desire to travel to foreign holiday destinations. As a result of economic recovery, but also due to the travel facilitations and social change, Chinese outbound tourism1 is expanding significantly. The number of holiday flights alone has increased in the last six years by 50% from 11.3 million to 17 million in the year 2011. In 2011, a total of 39.2 million Chinese travelled out of the country – approximately 14 million more than in 2006. The figures are, however, to be viewed with caution since around 72% of these trips were to neighboring countries Hong Kong and Macau. By 2020, experts anticipate further growth in Chinese outbound tourism of around 17% annually. For 2013, Euromonitor already anticipates more than 49 million people travelling abroad, which will make China one of the largest source markets in the world.
(Source: Travel in China http://www.euromonitor.com/travel-in-china/report)
In an international comparison, Europe currently takes first place on the Chinese traveler’s list of preferred destinations. Chinese tourists in Europe have steadily increased in numbers in the last few years, with the exception of the credit crunch years 2008 and 2009. According to official data by the Chinese tourism office, CNTA, just over two million Chinese visited European destinations in 2009. Just one year later 2.335 million visits were registered, an
increase of 14.7% within a year. Due to the statistical quirk that travellers entering Europe via Hong Kong or Singapore are not registered, many experts suspect that the number of Chinese tourists travelling to Europe is considerably higher in reality. A survey by IPK International on behalf of ITB Berlin drew the conclusion that about 3.8 million Chinese actually came to Europe in 2010. France and Germany are the most popular vacation destinations within Europe. In future, the Chinese will make an even bigger mark on Europe’s tourist hotspots – such as the Eiffel Tower or Castle Neuschwanstein – than they do today. The World Tourism Organization expects that, in 2020, a quarter of all tourists visiting Europe from Asia will come from China. If one follows the forecast of the School of Oriental and African Studies at the University of London, there will be more than 8.5 million Chinese tourists holidaying between the Algarve and the Ural Mountains. Other destinations such as the United States, South Korea, Japan and Malaysia have caught up at an aboveaverage rate in the past few years. Between 2004 and 2009, the growth rate on the US market was 158.6%. In comparison, the number of overnight stays in Germany increased by a relatively low 12.4%.
(Source: Baidu internal document—Baidu Travel Annual Review 2013, quoted from ETC)
With all the figures above, we can see Europe becomes a bigger and bigger market for Chinese tourists and this market will keep on growing in the foreseen future.
Baidu with its relative products like Baidu search engine, especially Baidu Travel (travel.baidu.com) is ideally providing the platforms for those travelers from China to grab tourism information for their EU destinations, and for EU travel section merchants to put their Ads to attract more Chinese travelers.
3. Acquisition
To step into foreign business, acquisition is one of the most direct entry mode. Regarding the shortcomings of traditional acquisition for FDI, acquisition of
internet companies’ risk is lower. The reason here is the operation of internet company needs to match the local market environment much more than the traditional companies, so normally after a successful acquisition, the company which is acquired will not have a very big change in the company cultures. Thus it will behave without too much differences comparing it was before, they mainly need to adapter mother company’s technology practices.
Baidu Acquisition case with Taboola
Taboola is the leading discovery platform, serving over 200 billion recommendations to over 550 million unique visitors every month on some of the Web’s most innovative publisher sites, including USA TODAY, Business Insider, NBC News, Chicago Tribune, and The Weather Channel. Headquartered in New York City, Taboola also has offices in Pasadena, London, Tel Aviv, New Delhi, and Bangkok. Publishers, marketers, and agencies leverage Taboola to retain users on their sites, monetize their traffic, and distribute their content to drive high-quality audiences.
In May 2015 - Taboola announced a multi-million dollar strategic investment partnership with Baidu Inc., the leading Chinese language Internet search provider. The partnership brings together two cutting-edge technology companies that are re-defining the "search" and "discovery" categories across the world's biggest markets. Together, Taboola and Baidu plan to bring discovery to the Chinese market, wheremobile is the number one way people go online.
The investment from Baidu is a follow-on to the $117 million Series E round of financing announced by Taboola this past February, and represents another significant vote of confidence in Taboola and the future of content discovery. Baidu ranks as the top website in China, and fourth most popular in the world (according to global traffic ranking firm Alexa), receiving tens of billions of
search queries every day, about 75 percent of China’s combined PC and mobile search market share.
Taboola has experienced massive growth since its inception in 2007, rising from less than $10 million annual revenue in 2012 to over $200 million in 2014. The Series E round in February was led by Fidelity Management and
Research Company, and included existing investors Marker LLC and Steadfast Capital, as well as new strategic investors Advance Publications (parent of Condé Nast and Advance Digital), Comcast Ventures, Mr. Carlo De Benedetti (chairman of the Gruppo Editoriale L'Espresso), Groupe Arnault (the controlling shareholder of LVMH), Yahoo! JAPAN, and others.
“Though our roots are in China, Baidu actively seeks out innovative technology companies abroad to partner and invest with,” said Peter Fang, senior director of Corporate Development at Baidu. “Taboola’s remarkable vision and growth over the past few years captured the admiration of our executive team, and we’re very excited about the potential of the discovery market worldwide.”
Taboola serves more than 200 billion monthly content recommendations to over 550 million users across some of the Web’s most innovative publisher sites in the US, UK, France, Germany, Italy, Thailand, India, Japan and Israel.
Media and technology partners around the world have leveraged Taboola’s technology to launch local initiatives. Italy-based Gruppo Editoriale L’Espresso worked with Taboola on rolling out a new sponsored content business. Last year Taboola announced a strategic partnership with Yahoo! JAPAN to launch “Yahoo! Content Discovery,” introducing content recommendations onto hundreds of premium partner sites across the Yahoo! Japan News network.
“We’re extremely honored to gain the support of such an esteemed global partner as Baidu,” said Adam Singolda, founder and CEO of Taboola. “We believe that discovery has massive growth potential in both existing and untapped markets around the world, and we plan to grow this new category even further with Baidu to help change the way people in China discover content they may like and never knew existed.”
Taboola’s predictive technology analyzes hundreds of real-time signals
(including collaborative filtering, geography, social media trends, and more) to deliver highly-personalized content recommendations. Its platform includes sophisticated targeting capabilities for marketers, and first-of-its-kind content optimization tools for publishers that are provided free of charge.
(Source: Catherine Shu, “Baidu, China’s Leading Search Engine, Makes Strategic Investment In Content Reco mmendation Platform Taboola”, 2015)
Baidu Acquisition case with PU
In October 2015, Baidu acquired the Brazilian daily deals site Peixe Urbano (PU) that was originally launched in 2010 and has over 25 million registered users. Speaking at the Baidu World Conference in Beijing, PU’s CEO Alexander Tabor spoke of how the company had benefited from implementing technology and strategy learned from Baidu. “In the past, we always looked to the US to see what was happening and what [tech] was applicable to Brazil. However, in recent years China has developed a fertile ecosystem for new mobile and O2O products and services” he said.
Post acquisition, PU adopted technology and operational practices from
Baidu’s own daily deals site, Nuomi, such as building neighborhood clusters of merchants, improving push messaging to the app’s users, implementing coupons redeemable via mobile and tweaking the discount levels to attract and grow users. “These and other initiatives have helped PU to grow revenue by 138 percent since the Baidu acquisition” added Tabor.PU executives have bi-weekly conference calls with Baidu and Nuomi and have set up a
knowledge sharing system where PU can learn and adapt Chinese O2O technology and operational practices to apply them to the Brazilian market.
North & South American market, we believe a similar action in the EU market will also bring comparable or even more benefits that Baidu retrieved from the cases above.
Study Summary
This study was divided from 2 companies (Baidu & V2Future)’ perspective. From V2Future, cooperating with Baidu is definitely the right step to fulfill the company mission—connect EU and Chinese business opportunities, but to gain greater success, V2Future needs to
(1) To build more partnership with Chinese internet companies like Baidu (e.g. Tencent, Alibaba Youku etc.) so that V2Future can provide not only a single company’s product to EU companies, but also a full internet solution to those EU companies;
(2) To help their EU local customers make right adaption so their presentation into those Chinese internet platforms can be really efficient for the Chinese internet users.
For Baidu, we again need to divide into 2 scenarios—
1. To attract international customers going to China, Baidu needs to optimize the process internally to match fill the culture gap, and also develop
partners like V2Future, who really understands both China/Local business to build the bridge between Baidu and the local companies
2. To step out of China, Baidu needs to – (1) Greenfield with correct region and market, where they are capable to compete with Google or any local players; (2) Focusing on the Travel related industry, for regions where they are less competitive with their own local resource; (3) Acquire local internet companies once the target and the market is right
List of References
V2Future internal document—The Short Cut from Alps to Great Wall ABS MBA International Business 2013-2014 course material by Alan Muller Baidu internal document – Baidu international business intro media kit 2013
Pankaj Ghemawat, (2001) Distance Still Matters, TOOL KIT September, pp.138-139 Barry Hedley, (1977) Strategy and the “Business Portfolio”, Long Range Planning February, pp 193-195
Michael.E.Porter, (1979) The Five Competitive Forces That Shape Strategy, Harvard Business Review March-April
Jay B.Barney,( 1995) Look Inside for Competitive Advantage, Academy of Management Executive, 1995 Vol.9 No.4, pp 55
Baidu internal document—Baidu Travel Annual Review 2013 Travel in Chinahttp://www.euromonitor.com/travel-in-china/report http://www.z-punkt.de/
China National Tourism Administration (http://en.cnta.gov.cn/)
Home.baidu.com www.v2future.com https://www.wikipedia.org
Michael Bonfils, Why Baidu’s International Mobile Strategy Will Change Everything, 2015 Catherine Shu, “Baidu, China’s Leading Search Engine, Makes Strategic Investment In Content Recommendation Platform Taboola”, 2015
Timothy Coghlan, How Baidu is Expanding Globally, 2015
Interview with Mario Fan, the CEO and Co-founder of V2Future B.V. Interview with Charlse Song, the Director of Baidu international business
