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Sohu (ticker: SOHU) Chairman and CEO Charles Zhang discussed China's Internet search market during management's Q2 2005 earnings results conference call (quotes are at times a bit unclear -- but you should be able to get the point):

On Baidu (ticker: BIDU)

....Baidu's leading position is a fact....

....for many years the portals like SOHU and others have not really entered the search market. Instead not only not competing it's not actually contributing traffic to Baidu, because the portals used by Baidu at ASP basically engine technology provider.

....we basically stopped working with Baidu and other portals also have stopped working with Baidu. It is really now is a test. But they are -- the leading player has the best technologies, whether that market lead is a solid one or is a hard conqueror or it can even be overcome.

On multinational Internet search companies

....multinational search companies has a very bad history in China….I do not see a multinational search company can be competitive.

On Sohu's search engine Sogou.com -- a Baidu competitor

....past six months have shown that we can regain our search market share very quickly. The reason for that is, first of all the Internet in China, the users have already been using the portals and portals like SOHU have huge traffic and the portals need to find a way, a smart way how to convert these user behaviors, as the traffic that are coming to the portals to read news and are using content to start search on the portals.

(Quotes are from the CCBN StreetEvents transcript.)

Source: Sohu CEO not sold on Baidu (SOHU 2Q05 conf call quotes)