Chimin Sang

Why Is Baidu Expanding to Japan?

disclaimer: I hold no position in BIDU. No long or short. The discussion is purely based on my microeconmics view.

Why Is Baidu Expanding to Japan?

TCL/Thompson and Lenovo/IBM cases are quite different from Baidu/Japan Market case. The two cases mentioned are in the hardware field. Known for very thin margin and heavy initial investment. Both TCL and Lenovo paid expensive acquisiiton cost to enter the market. TCL has failed. I believe Lenovo will win out in the end.

Baidu/Japan case is organic growth, and the upfront cost is relatively low. Search market is a high margin business. All these make this case a very different one. Time will tell that if this strategic move is good one or not. It is contigent on the quality of marketing/sales in Japan.

Why Is Baidu Expanding to Japan?

You may view Baidu's expansion as a variation of the current Chinese IT outsourcing to Japan. Many companies, such as HP China, do outsourcing projects for Japanese companies already. The relationship is similar to what India means to the US.

If you hold this view, you may see Baidu's expansion into Japan differently. There is labor advantage that Baidu can claim. Of course, the ultimate success factor is the marketing/sales in Japan.

You view does seem more of a guessing at this point. So will be everyone else. Baidu's success/failure in Japan needs time to tell.