Baidu boss: Google don't know China

Robin Li — the chairman and CEO of China's mega–search engine Baidu — says his service is now used by 99 per cent of his country's internet users. That's nearly 420 million people, or about one third of the country's population.

"We have very high coverage," Li said this afternoon during an appearance at the Web 2.0 Summit in downtown San Francisco, drawing laughter and applause with this bit of understatement. "We actually answer more queries in China than any other search engine in any other market."

That includes Google in the United States.

Baidu's hold on the Chinese market is especially strong since Google began redirecting its Chinese searches to Hong Kong to avoid local censorship. In a recent Business Week profile of Li, Google boss Eric Schmidt called his company's Hong Kong move a gift to Robin Li. "Every once in a while a gift is handed to you. We handed one to Robin," Schmidt said.

But Li seems to believe that calling it a gift doesn't quite do justice the situation — and rightly so.

When Google entered the Chinese market in 2005, Li was asked what Eric Schmidt should do to win the local search market. "I said [that if I were Eric Schmidt,] I would stay at least six months of the year in China," Lie remembered. "Apparently, Eric didn't take my advice. Hence, eventually, he left — and gave me a gift."

Baidu's stock price has doubled since January, when Google first threatened to leave China, and the company's market cap is approaching $40 billion — which, as Li pointed out, is about the same size as eBay.

The difference between Li and Schmidt is that, well, Li is Chinese. He studied computer science in the States and worked on search in Silicon Valley with InfoSeek. But he was born in Shanxi, a northern Chinese province. Li said that, like Google, he considered a move to Hong Hong to avoid censorship, but soon realized that this wasn't a possibility. "[Censorship] was a frustration...my first reaction was also 'let's move to Hong Kong]'," he said. "But I realized that wouldn't work for me, because I'm Chinese. If I were to move to Hong Kong, they would call me some kind of anti-government person. My life would be ruined.

"If an American company decides not to obey Chinese law, they are still called 'strategic partners.'"

Speaking with Business Week, Schmidt said that the Chinese deck was unfairly stacked in Baidu's favor — but Li calls this a "common misconception." Li pointed out that Baidu is just one of many search options in China. "There are a lot more choices in China than in the United States for web search," he says. "Here, you have Google and you have Bing. What is the number three?"

Li said that Google didn't succeed at least in part because it didn't understand the market. "China is a very different market," he said. "It is a large and growing market. The market conditions change every day. If you're not close to that market, it's very difficult for you to evolve with market demand." ®