June 12, 2021

After New York, Baidu goes public on the Hong Kong Stock Exchange

Baidu wants to ride on its success: the Chinese search engine, which has seen its stock market value in New York multiplied by 2.5 in one year, will now be listed on the Hong Kong Stock Exchange on Tuesday, March 23. The group hopes to raise 28 billion Hong Kong dollars (3 billion euros), to finance investments in the cloud and artificial intelligence. Because if the advertising disseminated on its search engine remains its main source of income, the former Chinese Internet champion has started a shift towards artificial intelligence. A change in strategy that is beginning to bear fruit, enough to give investors hope after years of stagnation in the company.

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Founded in 2000 by Robin Li, Baidu is part of the first generation of successful Chinese start-ups. Since Google’s forced departure in 2010, the site has dominated the online search industry. On the other hand, he missed the turn of the mobile, which defer the online activity on applications, escaping its algorithms. It suddenly ceded ground to Tencent, and its Wechat app, and Alibaba, and its Taobao e-commerce site, which, with Bytedance (Tiktok), monopolize advertising revenue.

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Apart from its video-sharing site Iqiyi, a real success, Baidu has long struggled to diversify. As a result, while it was on par with Alibaba and Tencent ten years ago, Baidu is now worth around 72 billion euros, against 550 billion euros for Alibaba and 650 billion euros for Tencent. The group is also in competition with a new generation of Web champions such as Bytedance, Meituan, specialist in online services, or Kuaishou, which offers short videos.

Frustrated Internet users

In response, Baidu sought to keep Internet users “captive” by increasing the number of internal sites, platforms and forums. In doing so, he alienated certain Chinese Internet users, frustrated by the search results, part of which referred to advertisements, another to Baidu sites, before proposing sites independent of the company. The Web regulator has moreover punished the search engine several times for its biased results.

Baidu eventually found a new martingale, which is starting to pay off. For about five years, Baidu has been seen as a specialist in artificial intelligence, from facial recognition to autonomous driving through the intelligent cloud. The company has been accumulating patents for about ten years, and in 2020, the company spent a fifth of its turnover on research and development. While advertising still represents around 80% of its revenues, its new activities have enabled it to post 5% growth in its turnover, despite the stagnation of advertising revenues.

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