Baidu (Nasdaq: BIDU) has become a Wall Street darling that is often mentioned on prime time market television for their explosive growth and relative dominance over Google (Nasdaq: GOOG) in China.

I myself have been a shareholder of Baidu in the past, irresistibly bullish because of their traffic growth and potential size of the Chinese internet market. Unfortunately, the more I learned about their business practices the more I question their business model, management, and reason why they have a dominant position over Google and other internet companies in China.

Last week, the market cap for AstraZeneca (Nasdaq:AZN) was cut by some $10 billion dollars following a string of bad press including news that Teva Pharmaceuticals (Nasdaq:TEVA) will soon be selling a generic version of their pediatric asthma drug Pulmicort Respules following a favorable ruling from the FDA in Teva’s favor. This drug currently has sales of $996 million dollars and has been growing nicely throughout the world. Teva essentially wants to sell the same drug as a generic and will presumably undercut current AstraZeneca pricing in order to steal business from them. On Friday, AstraZeneca stopped some of the bleeding by pushing through a restraining order that prevents Teva from marketing and selling this generic version of budesinide until the U.S. District Court of New Jersey makes a decision on the patent at a hearing in mid-January.

Looking beyond this tug of war, the real 800-pound gorilla threatening AstraZeneca’s Pulmicort Respules and any Teva-like copycat comes from a small pharmaceutical company called Map Pharmaceuticals (Nasda:MAPP). Map is in late stage 3 development of an improved version of Unit Dose Budesonide (UDB) for the treatment of pediatric asthma that outperforms Pulmicort Respules. Map’s product is a reformulated version of UDB that allows parents to administer the drug to their children more easily and with a lower steroid dose that helps to cut down on side effects.

Recent data measuring search query volumes in China and the Untied States indicates that Baidu has now passed Google to become the most popular country specific search engine on the planet. 

Comscore data for the United States shows Google conducting 7.398 billion searches in August 08. A separate Comscore report shows Baidu conducting 7.406 billion searches in July 08 in the Asia Pacific region. Granted, this large region includes 10 different countries including Japan, where Baidu launched its first and only non-Chinese focused search engine earlier this year and likely conducts approximately 30 million searches a month.

A new report out yesterday from The Data Center of the China Internet is forecasting hyper growth for the online travel industry in China. Revenue in 2008 is set to surge to $527 million from $309 million in 2007. From 2008 to 2009 revenue growth will accelerate to $1 billion.

With revenue set to triple over the next 24 months you should expect to see both Ctrip's (Nasdaq:CTRP) and eLong's (Nasdaq: LONG) business thrive going forward. With the Beijing Olympics quickly approaching in mid-2008, now may be the time to take positions in these companies.

eLong (LONG), a web and call centered based travel service provider in China, has seen a noticeable increase in trading volumes over the past 2 weeks. More than 5 times the average number of shares have traded fairly consistently over the past 10 days. This coincides with the hiring of a new CEO and rumors that Expedia (EXPE) is looking to sell their 52% stake in eLong according to Pacific Epoch.

eLong is a rather unique story in that they are an Internet focused company in China who's stock has been stuck in a rut for the better part of a year. So why isn't this stock flying like the rest? That's a good question. The company's balance sheet is wonderful with $156 million in cash and no debt. Their market capitalization is just $250 million. This means you can buy the whole company for an enterprise value of just $94 million or so. In other words, you get over $6 a share in cash. With a $10 stock price this provides investors with a nice cushion. eLong is not a small company either. They are regularly identified as the #2 player in the travel space in China behind the $3.4 billion market cap Ctrip (CTRP). eLong reports over 1,800 employees versus Ctrip's 5,500. Their revenue has grown 20% or more a year since they IPO'd and should approach $50 million in the coming 12 months. Expedia's ownership in eLong has obviously created a bit of an overhang for the stock as nobody really knows their plans. Still, the company is in the fastest growing Internet market in the world where the world will be visiting next year with the Beijing Olympics some 10 months away. From this, the country expects a prolonged up-tick in tourism. China is treating the Olympics as an economic and social coming out party to the world. A truly wonderful and vast country.