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Baidu SWOT & PESTLE Analysis

ID : 52574653| Aug 2019| 15 pages

COMPANY PROFILE -Baidu

Business Sector :Internet

Operating Geography :China, Asia

About Baidu :

Baidu is a Chinese internet company founded by Robin Li. The company’s search engine strives to provide relevant search results for billions of daily queries by focusing on technology optimized for local tastes and preferences. Apart from its primary product, its search engine, the company also has several other products like its Baidu PostBar (the first ever Chinese query-based searchable online community platform in the world, Baidu Encyclopedia (the largest user generated Chinese encyclopedia in the world) and Baidu Knows (largest Chinese language interactive knowledge sharing platform in the world). The company also has other vertical search-based products like maps, video search, image search, etc. Using the Baidu websites and affiliated partners, Baidu offers ad displays and performance based online marketing services to businesses. Performance based online marketing services generate majority of the revenues for the company, wherein customers are charged based on cost per click.

Baidu Revenue :


RMB 102,277 million (FY 2018) (YoY 21% growth)
RMB 84,809 million (FY 2017)

Competitive Analysis of Baidu

SWOT
PESTLE
The SWOT analysis for Baidu is presented below:
Strengths
Weaknesses
1. Dominant share of the Chinese online search market
2. Expansion of ecosystem beyond search
3. Investment in new technologies
4. Strong capabilities in Autonomous Vehicle (AV) technologies
1. Controversies over search results displayed by Baidu
2. Low global market-share
3. High dependency on online marketing services for revenue generation
4. Slowdown in advertising revenue compared to peers
Opportunities
Threats
1. Growing internet usage in Africa presents a great international expansion opportunity
2. Growing fintech industry provides diversification opportunities
1. Execution, compliance and competitive risks of cloud-based services
2. Third party apps or practices interfering with user experience
3. Fluctuations in market values of investments
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Detailed SWOT Analysis of Baidu

 

Strength

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Weakness

1. Controversies over search results displayed by Baidu: The company has been caught in multiple controversies regarding the search results displayed in its search engine. In January 2019, an article accusing the company of promoting its own sites, especially a platform named Baijiahao, through the search engine went viral on social media. The company denied the allegation and claimed less than 10% of the results are about Baijiahao. In 2016, a cancer patient’s death led to investigation by the Chinese authorities over allegations that the patient died from a questionable cancer treatment procedure that he had seen in Baidu’s search engine. The company was accused of showing dubious treatments in search results in exchange for money. These controversies cropped up at a time when the Chinese have few options for internet search, with Google having left in 2010, and with Bing also blocked in China for a day in January 2019. Baidu is the runaway leader in the Chinese search engine market with 64.5% share across all platforms, but these controversies might give an advantage to other Chinese search engines like Sogou and Shenma to gain market share by claiming objectivity in their search results. There are also murmurs in the public asking for Google to be back in China. Google is contemplating re-entering China with a censored version of its browser which, if successful, could spell the end of Baidu’s dominance.

2. Low global market share: Despite being the runaway leader in the Chinese search market, Baidu has negligible market share in the worldwide market that is dominated by Google. Baidu is hardly present outside China, unlike Google that dominates local search engine markets in many countries. As of April 2019, Google has a global market share of 88.47%. Baidu’s share is just 0.66%, which is considerably lesser than even Bing, which has the second highest share of 4.81%. Though Baidu is targeting global expansion and has made a beginning with forays into Japan, Brazil, Thailand and Egypt, it faces an uphill task to gain a significant foothold worldwide when even Bing and Yahoo could not compete effectively with Google.

3. High dependency on online marketing services for revenue generation: A large portion of Baidu’s revenue comes from online marketing services. In 2016, 91.5% of revenue was from online marketing services. In 2017 and 2018, the figures were 86.2% and 80% respectively. Despite the decrease in the share of revenue from online marketing services in the last few years, the company has a long way to go to generate other significant sources of income. If the advertisers on Baidu feel that lead generation would be better from other advertising platforms, then there will be a loss of customers for Baidu, which will significantly impact revenues due to this dependency.

4. Slowdown in advertising revenue compared to peers: The media advertising market in China is expected to grow 15% in 2019 despite the economic slowdown. Digital advertising is predicted to rise 22% and reach $79.8 billion in 2019, and become $134.3 billion by 2023. Baidu, despite being one of the top digital advertising companies in the country, is struggling to take advantage of the market growth and is being overtaken by competitors. The company’s advertising revenue growth in Q1 2019 was the slowest in more than a year at 3% YoY. This was less than the 10% growth in Q4 2018 and 23% in Q3 2018. Baidu’s peers Google and Yandex saw growth of 15.4% YoY and 18% YoY respectively. It is expected that the tax cuts by the Chinese government for small businesses would enable small companies to use the tax savings in spending on PPC advertising campaigns in search engines, which might boost Baidu’s advertising business.

Opportunity

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Threat

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Major Competitors :

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Baidu Analysis Report

1. Annual Report 2018 https://ir.baidu.com/static-files/4ce88b07-60fe-4561-9cc9-2b0e0ec9dfd6

2. Company overview https://ir.baidu.com/company-overview

3. Chinese tech giant Baidu to require real-name registration from users https://news.cgtn.com/news/3d6b444e30677a4d/share_p.html

4. How Baidu is Stacking the Deck Against the Competition https://www.fool.com/investing/2018/01/12/how-baidu-is-stacking-the-deck-against-the-competi.aspx5. Bing, Baidu and a Big Mess for Chinese Search Engines https://www.wsj.com/articles/bing-baidu-and-a-big-mess-for-chinese-search-engines-11548328142

The detailed complete set of references are available on request in the 'Complete report' on purchase.

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Baidu SWOT & PESTLE Analysis - SWOT & PESTLE.COM

SWOT & PESTLE.com (2019). Baidu SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/baidu/ [Accessed 12 Dec, 2019].

In-text: (SWOT & PESTLE.com, 2019)

Copyrights and Disclaimer

Baidu SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.

Copyright of Baidu SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Baidu SWOT & PESTLE Analysis
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