G o o g l e ' s m o b i l e b u s i n e s s Towards new horizons: i s building the brand o n worldwide. a n

$ 8 b Célia LE CORRE i l l i Mémoire de 4e année o n r Séminaire : Métiers de l'Expertise Stratégique et de l'Audit e v e n Sous la direction de : Bruno TILLY u e r 2012 - 2013 u n r a t e ,

Acknowledgements

For my academic search, I would like to thank all the people who have accepted to deliver their precious testimonies : Zhifan, Tangying, Wanlu Zhou and Mrs. Mengchao Yang.

I would also like to thank M. Blaise Thierrée, director of the Institute Confucius in Rennes, together with his friend M. Yinping Chen, for having answered to my questions and giving me key contacts.

I thank also M. Kaiser Kuo, Director of International Communications and spokesman of Baidu, for having accepted to give me an interview.

Thank you for my workmates, Simon Guillorit and Augustin Robert, for having helped me all along my search.

Finally, I thank M. Bruno Tilly, my academic search advisor, for having guided me from the birth of this work till its end. Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE

Table of contents List of acronyms and abbrevations...... 5 Executive summary...... 6 Introduction...... 7 I.Baidu, national genuine growth engine of the conquering Inc...... 13 A.The rise of Baidu (that's Chinese for ): the birth of a giant of the Internet...... 13 1.The «Baidu project»: a Chinese success story...... 14 2.Success and flaws of the business model of Baidu...... 15 a.A success owned to the comprehension of the and needs...... 16 b.Strong weaknesses: bribes, opacity, and mistrust...... 17 B.The influence of culture on management: Baidu, a Silicon Valley product with Chinese origins...... 19 1.Links between management and culture...... 20 2.A reminder of basis of the Chinese culture: Confucianism and Sun Tzu...... 21 3.Impact of the Chinese's and Silicon Valley's minds on Baidu management...... 22 II.A look turns towards the world: internationalization, the crucial bet of Baidu for its future...... 25 A. Becoming a global brand: the choice of localization in the emerging countries...... 26 1.The specifities of the Internet market ...... 26 2.Baidu and the choice of localization...... 27 a.What and why?...... 28 b.Where and why?...... 29 .How?...... 30 d.Failures...... 32 B. Google VS Baidu: a merciless and global battle for the Internet market...... 34 1. The «googlization» of the world...... 34 2. Google VS Baidu: the confrontation of two giants...... 36 a.From the beginning, a deep mistrust between the two firms...... 36 b.Similarities and differences between the two business models...... 36 c.Mobiles: the next (and decisive) battleground...... 37 III. Diagnostic...... 40 Conclusion: has Baidu won its bet?...... 41 A. Short-term scenarii: an internationalization very encouraging...... 41 1. Baidu would succeed in setting up in other emerging countries...... 41 2. A difficult spread in English-spoken countries...... 41 3. A fundamental transition from a products company to a platform provider...... 42 B. Future of Baidu from a global perspective: Baidu VS Google, who will win?.....42 Bibliography...... 43 Appendices...... 46 ...... 46 I. Appendix 1: understanding the Chinese culture...... 47 A. The interview sequence...... 47 B. Answers of Chinese students to the interview sequence...... 48 C.Interview of Mrs. Mengchao Yang...... 50 II. Appendix 2: understanding the strategy of localization of Baidu...... 51 A. Letter to M. Kaiser Kuo for asking an interview...... 51 B. Transcript of the telephone conversation with M. Kaiser Kuo...... 52

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List of acronyms and abbrevations

• CCP:

• IPO: Initial Public Offering

• USA: of America

2013 5/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Executive summary

In january 2013, , Baidu CEO, emphasized four business focus of Baidu in the future: the traditional search, mobile cloud, LBS and international strategy. This is this last focus that I have chosen to study through my audit report. This work begins with a development on Baidu, the first in China and the sixth more visited site in the world. Indeed, before talking about a strategy of a firm, I think that it is important to understand the firm, how it thinks, how it operates, why it acts in this way and not in an other way. The Eastern and the Western mindsets being highly different, and therefore their respective business strategy, I have chosen to explain the particularities of the Chinese culture. Then, I deal with the core of my audit report: the strategy of internationalization of Baidu, which is localization in the emerging countries. I explain this choice, the tools developed to put into practice this strategy, and discuss about its relevance. Finally, I study the bigger impediment of Baidu in its international strategy, that's the American giant Google. As it will be developed all along this audit report, this Baidu-Google battle for the Internet market is not only a fight between two search engines. Behind that, it is also a fierce competition between two countries, the United States of America and China, for the leadership of technology and innovation in the world.

2013 6/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Introduction

1994, State University of New York, United States of America (USA). Robin Li, today the co-creator and CEO of Baidu and considered as one of the most influential people in the world by The Times in 2010, was then one of these students keen on computers. It had been almost three years that he had left China for the USA. His decision was prompted by the crackdown of the government on pro-democracy demonstrations in Tiananmen Square, in 1989. For Robin Li, China had then become a land without hope. In parallel with his computer studies, he became enamored of the technology boom which was taking shape in Silicon Valley. He developed especially a kind interest in the Internet, which was then in its beginnings. He spent much of his time in trying to solve one of the Internet industry’s earliest problems: putting information in order. Its work ended up really paying off: in 1996, Robin Li developed an Internet search method he called “RankDex”, shortly before a certain created a different method that became … Google. Thus Robin Li considered, and still considers, that Larry Page had taken his inspiration directly from RankDex. It was the beginning of a long story of mistrust and fights, which it is still happening right now. Similarly, as he was attending a computer science class, Robin Li was stung by a remark from a professor: «Do they have computers in China?». He became determined to change the perception that China was technologically backward. These two factors, the war of authorship with Google’s founder, and the representation of China as an underdeveloped country, marked a breakthrough in Robin Li’s life. A few time later, he and Eric Wu founded a search engine in a hotel room overlooking University’s Campus. They called it Baidu. It is today the second search engine in the world. It is especially the one which has kicked the giant Google out from China. Some could see there like a smell of revenge over the past… This is also, and above all, a new fight in the battle between Google and Baidu for the Internet market.

In the 1990s, the Chinese leaders had to face to the emergence of the Internet. They quickly made the choice of technology in favor of economic growth. Thus, in 1996 and

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1997, banners praising for the merits of the Internet could be seen in Shanghai1. At the same time, the Chinese President Jiang Zemin claimed that “the development of the Internet is vital for the country”2. Like so, in the official discourse, the Internet was an element of the come-back of China in the group of the world powers. Ten years after, it can be said that this economic bet is highly winning: China has become a worldwide giant in electronics, and the second market for telecoms. This is highly due to the development of the Internet. In 2010, the Chinese government gave an assessment of this spectacular evolution: 43 billion renminbi (5 billion $) have been invested since 1997 in the development of infrastructures; a national fiber optic network which connects 99,3% of cities and 91,5% of villages; an annual average growth rate going over 26% in the new information technology industry; and generating annual revenues of 500 billion renminbi (60 billion €), that is, 10% of the global trade of China.3 Thus in 25 years, China has become a central player of the Web, by its infrastructures, its giant firms and its huge number of Internet users.

At the same time as the Internet has become a powerful economic sphere, it has also become a highly strategically political area. Indeed, the Internet means the possibility for people to choose their information, to exchange amongst themselves, and to see the reality of China and of the world. Therefore, for the Chinese Communist Party (CCP), it was obligatory to control this potentially highly risky space of discussion. In this way, censorship is shown as a necessity to ensure political stability and Internet security, which would be required for the digital sovereignty. Thus as soon as 1995, the Public Security Minister was put in charge of overseeing the starting of the Internet. Since then, laws and codes of conduct have been multiplied in order to answer to this securitarian requirement. For example in 2001, websites who wanted to broadcast information had to register and to commit to use information which came only from official sources. Moreover, the Chinese state created what it is called “The Great Firewall of China”. According to a report from OpenNetIniative in 2005, “the filtration system of the is the more technically advanced in the world”.4 In addition to block the undesirable information, the

1 HASKI Pierre. Internet et la Chine. Paris: Editions du Seuil, 2008, p.7 2 ARSENE Séverine. Internet et politique en Chine. Paris: Editions Karthala, 2011, p.33 3 Ibid., p.25 4 Quoted in: HASKI Pierre. Op. cit., p. 30

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Chinese government keeps under surveillance the content of what is said on the Internet, though the responsibilitation of the Internet users. Everyone has to behave as a cop, in the name of the political and social stability, shown as a condition of national power. Like so, China has the world record of Internet users in jail (49 out of 68 jailed cyberdissidents are in China according to Reporters Without Borders). Therefore, the Internet reflects the paradoxes of China: it is at once promoted as a factor of development of a world power, and highly controlled in the name of political stability.

Some Internet portals are born to accompany the digital revolution of China. The most powerful is Baidu, the object of my academic research. From the beginning, I wanted to work on an Asian giant, to understand the Eastern strategy, which is quite different from the Western strategy, and which has led to worldwide firms, such as Samsung, Hyundai or HTC. Secondly, I wanted to work on a firm linked with the Internet technology, because the Internet has this distinguishing feature to force firms to rethink strategy. Thus, it is because this is a space of such great opportunities that I have decided to work on a firm from the Internet industry. So quickly, after talks with my workmates, Simon Guillorit and Augustin Robert5, I have decided to work on Baidu. More specifically, my audit report is focused on the strategy of international development of Baidu. Indeed, even if Baidu highly dominates the Chinese search engine market (aaccording to Chinese Internet stats company CNZZ, Baidu held a 72.1% market share in january 2013), the domestic competition is higher and higher. Therefore, Baidu has to grow at an international level. Robin Li has regularly claimed that the goal is to “become a universally recognized brand in over half the world’s countries”. Consequently, my researches are focused on whether if this strategy of international development is going to work, or not. More specifically, I want to determine if Baidu, given that a lot of what it does is very unique to China, will succeed to overcome the cultural barriers. This bet on the forecast is especially decisive as if Baidu does not succeed in expanding abroad, its future will be highly compromised.

I have built my academic search on two sources, namely academics and testimonies. On the one hand, my academic sources consist in books dealing with the

5 See their audit reports, Simon Guillorit's about the cloud strategy of Baidu, and Augustin Robert's about Baijob.

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Internet in China, university articles relating to Baidu itself, to the marketing strategy in the Internet industry, and to the importance of both Confucianism and Sun Tzu's Art of War in the management of Chinese firms. In the same way, I wrote to several journalists in order to better understand the operating of Baidu. I selected those journalists according their specialty in both China and the Internet industry. Unfortunately, none of them has answered to me. I think that it could have to enrich and support (or not) my hypothesis. I have also met a Chinese engineer semiskilled in new technologies and working at CNRS in Bordeaux, who helped me a lot. Moreover, I had an interview with the director of the Institute Confucius in Rennes, who gave me contacts which enable me to go on my searches. On the other hand, I have chosen to write this academic research with a part of testimonies. Indeed, I wanted to understand the Chinese culture, so as to better understand how Baidu thinks and acts, and also how Baidu users consider it. In this way, I have interviewed three Chinese students. My questions were both about Chinese culture and their use of Baidu. These answers enabled me to better understand the context in which Baidu evolves. I had also made a questionnaire which was broadcast to Institute Confucius students, in order to broaden my sample and so to justify my hypothesis. Unfortunately, I did not have any answers to it. Finally, I wanted to entry into both Baidu and Google. I succeeded in having an interview with Kaiser Kuo, Director of International Communications and spokesman of Baidu. This interview has confirmed my hypothesis. Relating to Google, I did not have any answers from my asking of interview. In addition to this work of research and the collect of testimonies, I am following from october 2012 a technological surveillance, in order to watch the strategy of international of development of Baidu, which evolves at an impressive pace (about each month, Baidu announces a new service or partnership relatively to its internationalization).

All along this academic research, I have developed hypothesis about Baidu and its strategy of international development. • My starting hypothesis (H0) was that the expansion of Baidu, more especially in the Western countries, seemed to be bound to fail, given that the cultural gap between the two civilizations, in terms of ways of thinking and acting. Moreover, the on the Internet (and in others areas) is firmly condemned in the

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Western countries. Thus, in January 2011, former Secretary of State Hillary Clinton, in a speech on Internet freedom in Washington, cautioned China about the dangers of censorship and warned that such talk could harm China-U.S. relations. These relations have also been complicated by the attacks by Chinese hackers on the USA. But quickly, I withdrew from this hypothesis, as my searches showed that Baidu is concentrating on the developing countries market. • That’s why my following hypothesis was (H1): Baidu has chosen to expand only (in a first time) in emerging countries, and this seems encouraging. An important thing is that the Chinese firm has decided to internationalize through the strategy of localization. That is adapting its services to each local culture, relatively to languages, but also needs of customers and different states of mind. This strategy seems to be very promising. But this hypothesis is insufficient, because it forgets an important player: Google, the first search engine in the world, and by far. It is especially crucial in this work as Baidu has often been criticized for being only a Google clone. • That’s why my third and last hypothesis (H2) is: the strategy of internationalization of Baidu is seriously compromised by the domination of the American giant Google on the Internet market. It has to be noted that, behind Google, there is not only the world leader of the Internet, but also the USA. Therefore, political relationships between China and the USA have also to be explored in order to understand if Baidu will succeed in becoming a global brand. And yet, the relationships between the two countries are far away from to be good, as I will develop in this work.

Relating to the plan of my academic research, it is built on three parts. In the first part, I have chosen to explain how Baidu has become the second search engine in the world. Indeed, I think that it is important to bring the facts in perspective and to understand how Baidu operates, in order to get why did it choose to internationalize and why did it give priority to one strategy rather than another. In short, I wanted to understand, and to make understand to my readers, how Baidu reflects, thinks, and acts, from the inside. This first part is divided into two sub-parts: the first deals with the history of Baidu, from the initial ideas of Robin Li, to the introduction of Baidu in the Nasdaq and its domination on the Chinese Internet market. The reasons of this success, which have to be related to the special features of the Chinese Internet market, but also the flaws of this business model

2013 11/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE will be explained. In the second sub-part, I will show in which extent the culture influences on management of a firm, through the example of Baidu. I will demonstrate that, although Baidu claims proudly its Chinese origins and that some of its values can be identified as being the product of both Confucianism and Sun Tzu's mind, it is actually a Silicon Valley's product.

The object of the second part of my audit report is the strategy of international development of Baidu to become a global brand, the core of my work. Iit is divided into two sub-parts. The first sub-part explains which this strategy is, namely the choice of localization in emerging countries. I will begin to analyze the special features of the Internet market in terms of marketing strategy, and then the impact of culture on international business strategy. It is important to grasp both how the Internet strongly differs from the traditional business and that each firm which wants to internationalize has to take cultural environment into account if it does not want to fail. Afterwards, I will make clear why has Baidu decide to go abroad, why has it chosen to develop only in emerging countries, what has Baidu propose to these customers and by which means. I will also talk about the failures of this strategy of Baidu in both Russia and Japan, and the reasons of this flop. In the second sub-part, I have decided to clear up the current battle between Google and Baidu for the Internet market, Google being the main obstacle for the strategy of internationalization of Baidu. Besides, Baidu’s nickname is “China’s Google”, because it has taken a lot of things from the American search engine, and I wanted to see if it was true also relating to its international strategy. In this sub-part, I will begin with showing the domination of Google on the world, then I will explain the constant fight between Baidu and Google and finally the current battlefield which could be decisive for the two search engines, that is the mobiles market.

My third and last part will be my diagnostic about the strategy of international development of Baidu. More specifically, I will give my opinion about the one who will win in the Baidu-Google battle for the Internet market.

2013 12/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE I. Baidu, national genuine growth engine of the conquering China Inc.

Created in 2000 by Robin Li and Eric Xu, Baidu has become today a huge player in the Internet market. The name was inspired by a poem written more than 800 years ago, and means «a hundred degrees» in chinese, which can be translated by «continually innovating». Representative of the power of China in the economic world, Baidu is the first search engine in China and the sixth more visited site in the world. Baidu offers fifty- seven search and community services, such as an online collaboratively built encyclopedia (), a keyword-based discussion forum () and a query-based searchable community to share knowledge and experience (). This first part of my academic research is dedicated to explain on the one hand how Baidu has become a giant of the Internet, and on the other hand how it is operating, and particularly the influence of both Chinese and occidental cultures on its management.

A. The rise of Baidu (that's Chinese for Google): the birth of a giant of the Internet

In 2011, when Yandex, a Russian Internet company which operates the largest search engine in Russia, launched an initial public offering (IPO) on Nasdaq, they had the following slogan: “We are the Baidu of Russia”. Whereas everybody in the world knows

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Google, they choose to demonstrate their credibility by refering to Baidu. This is an other example of the power of Baidu, the one which has succeded in doing what no other Internet company has been able to do: defeating Google and Yahoo in its home market. In order to understand how the “Baidu project” has become Baidu, the first part of this academic research will tell the story of the Chinese giant. It is build around three key points: the birth of the “Baidu project”, the reasons of its success in China, and finally the flaws of this business model.

1. The «Baidu project»: a Chinese success story

• From an enterprise service to a general search engine.

In its early days (Baidu was born in 2000), the Chinese startup was not built like Google. Indeed, Li and Wu's first idea was to become the next Inktomi, an American firm which guided search on other Web portals. Thus in the beginning, Baidu was not an independent site, but it licensed its search index to Sina and Sohu, which were then the dominant Web portals in China. But quickly, Li realized that these partnerships were preventing Baidu from its own success. That's why, in september 2001, he took a risky and fundamental change in the story of Baidu: it shifted from an enterprise service to an independent, general search engine. This is here that Baidu has become to be nicknamed «China's Google», as the site looked almost exactly like Google's home page.

• Looking for investors: the entry of Google.

The challenge for Baidu was at high-level: the Chinese firm has to reinvent itself. In order to win this bet, Baidu needed a lot of money. It is here that Google intervened. The American giant contributed $5 million to Baidu's $15 third round of financing. The aim was to build a strong relationship (namely a relation of dependence) with a view to purchasing the Chinese startup.

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• The IPO in Nasdaq: the completion of the Baidu project.

In 2004, Baidu reached the break-even point, a real exploit. On August 5th, 2005, Baidu became the first Chinese firm having been floated on Nasdaq, the New-Yorker Stock Exchange. When trading ended that day, shares of Baidu closed at $122, that is a rise of 354%, the biggest opening on Nasdaq since the dot-com peak in 2000. In 2011, its revenue was $2,30 billion, that is a rise of 83,3% in one year. Today, thirteen years after its creation, it is worth at $39,7 billion in the Stock Exchange, the double of Yahoo! Therefore, it can be said that the Li's bet was highly won, and by far. Baidu is today the first search engine in China, and the fifth most visited site in the world.

After having told the story of the «Baidu project», let's study more precisely the business model of the Chinese firm, its successes and its flaws.

2. Success and flaws of the business model of Baidu

« Our business model is mainly based on a performance-oriented marketing platform for businesses to cost effectively reach relevant Internet users (…) and an extensive selection of tools for managing their accounts as well as date for analysing and optimizing ROI.»6 (Robin Li)

The business model of Baidu is dedicated to help the companies to take advantage of the benefits of search engine marketing to develop. More particularly, as Baidu is not focused only on companies, but also on people more generally speaking, the Chinese firm's goal is to provide the best way for people to find what they are looking for on the Internet. This business model is funded by offering paid search placement, or the selling of engine results for particular keywords to the higher bidders. Which are the successes and the flaws of the business model of Baidu, that's what we are going to explain.

6 Official website of Baidu. Available on: http://ir.baidu.com/phoenix.zhtml?c=188488&p=irol- homeprofile_pf

2013 15/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE a. A success owned to the comprehension of the Chinese language and needs.

• A perfect understanding of the Chinese language.

If Baidu has such a great success in China, it is because it provides an answer adpated to the demand, that is the Chinese Internet users. For that matter, the slogan of Baidu against Google is: “Baidu understands better Chinese than Google”. Adapting to a particular demand, it means to master the culture, whose the language, and the needs of the public. The Chinese language is one of the most complicated language in the world. Because it is composed of symbols and that concepts are expressed through a group of combined symbols, it is much more difficult to scan this information quickly. Thus, there are at least thirty-eight ways of saying “I” in the Chinese language. Let's imagine how difficult it would be to scan meaning from this page if it was presented in Chinese symbols. And yet, the knowledge and especially the understanding of a language is crucial to build a search engine. As Baidu has a perfect command of the Chinese language, it can tailored its search technology for the users' needs. This is a great competitive advantage over all the Western search engines. Moreover, the pronunciation of “Baidu” is very clearly and separately, and so easy to be spoken and heard. But “Google” is difficult to be pronounced in Chinese language.

• An offer adapted to a particular demand.

Baidu not only masters the Chinese language, it has also understood the Chinese Internet users' needs, which are well different from the Western Internet users. Indeed, the Internet is a phenomenon especially urban and rather young in China. 71% of the Internet users are less than thirty.7 These young users have specific needs. More specifically, the first reason for which they use the Internet is entertainment. And Baidu well get it. Indeed, it was still a few years ago the primary vehicle to locate and download free MP3 files, allowing massively pirating. This is one of China's most popular online activities, and thus it enabled to Baidu to have a great success with the Chinese users. But it is to notice that, in

7 HASKI Pierre. Internet et la Chine. Paris: Editions du Seuil, 2008, p.73

2013 16/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE august 2011, Baidu concluded a major licensing deal with three of the world’s largest music companies, which shut down to a vast amount of pirated music.

Besides, another important use of the Internet in China is communication, that is blogs and social networks. The Chinese people like to share their interests, to express their opinion, to talk with their friends. Baidu get it too, and offers many popular community-based services, such as Baidu PostBar, the world’s first and largest Chinese-language query-based searchable online community platform, and Baidu Knows, the world’s largest Chinese- language interactive knowledge-sharing platform.

This success of Baidu for these specific uses was confirmed by the testimonies that I have collected. Thus for Wanlu Zhou: “I use Baidu mainly for downloading musics, films and blogs”8. Concerning Tankying, she loves Baidu, “because it matches with our uses, it knows our society and our state of mind, so it is very local and useful for the Chinese”9. But these testimonies agree also to state that when they are looking for information, they use Google. Thus for Zhifan: “information on Baidu are not clear nor effective, because the government control and delete some information. That's why I use Google for international information.”10 This leads to the third reason of the success of Baidu in China: the fact that it uses its privilege as a China citizen to gain a market power. Indeed, the domination of Baidu is also explained by the support of the Chinese government, which works in two ways: Baidu benefits from the help of the government face to its foreign competitors, but it exchange, it enables the exertion of censorship. This is one of Baidu's flaws, as it will be explained in the next point. b. Strong weaknesses: bribes, opacity, and mistrust

• The perversity of a business model funded by advertisng.

One of the reasons for which Baidu is such an interesting case, it is that its strong points can be considered as weaknesses. And the strongest weakness of Baidu is mistrust,

8 See Appendix I.B. 9 Ibid. 10 Ibid.

2013 17/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE for three reasons. First, as we saw it, Baidu is mainly funded through advertising income. The risk is that the Chinese search engine does not file search results by relevance according to a complex algorithm (such as Google), but firstly according to advertising revenue that it gets from its partners. And this can generate big problems. For example, in november 2008, Baidu was accused of allowing unlicensed medical services to buy search rankings. Thus a search for the word «cancer» on Baidu leads to hospitals that paid for top ranks in results, rather than giving information on cancer itself. More worrying, the search rankings had guided people suffering from illness to unlicensed and expensive hospitals that failed to cure them. Moreover, in august 2012, some Baidu's employees have been arrested on suspicion of having accepted bribes to delete posts from its forum service.

• An opaque structure Secondly, the structure of Baidu does not inspire confidence. Indeed, the parent company is located in the Cayman Islands. Besides, Baidu is mute concerning its stakeholders, and remains opaque for its users.

• Baidu, a precious Chinese government's tool in censorship Thirdly, and this is the main reason of this mistrust in Baidu, the Chinese firm highly enables the exertion of censorship by the Chinese government. When he is asked about censorship, Robin Li still answers the following: «I am a manger, I do not do politics. This is not me who decides about these questions.» He justifies himself as stating that «as a locally operated company we need to obey the Chinese law. If the law determines that certain information is illegal, we need to remove it from our index».11 Thus for example, during the twenty-third anniverserary of the Tienanmen Square massacre, when Baidu users searching for «Tienanmen Square», they received hits on tourist sites. Words such are «anniversary», «commemorate» or even numbers which could allude to the anniversary date were censored. Symbol of this highly questionable collaboration, Baidu has recently received the government's «China Internet Self-Discipline Award». However, as Baidu becomes more and more visible on computer screens around the world, making public its

11 WATTS Jonathan. «The man behind China's answer to Google: accused by critics of piracy and censorship». The Guardian, published on 8th december, 2005. Available on: http://www.guardian.co.uk/technology/2005/dec/08/piracy.news?INTCMP=SRCH

2013 18/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE nationalism can be tricky if it really wants to be global. Thus, on September 18th, 2012, during the nationalistic crisis between China and Japan about the Senkaku islands, Baidu put up on its homepage an image of the disputed islands, with a flag claiming that they were China's territory. Therefore, a fundraising based on advertising revenue, an opaque structure, and a strong support with the Chinese government lead to a great mistrust towards Baidu. And yet, the most important thing for any firm in the world is to be trust by its users. Baidu has definitely to improve it if they want to still have their domination in China, and to expand outside.

After having studied the business model of Baidu, it is interesting to understand how it is operating, from the inside. Indeed, the originality of Baidu is that its way of functioning is both influenced by the Chinese culture and Silicon Valley's mindset. This is the object of the second sub-part.

B. The influence of culture on management: Baidu, a Silicon Valley product with Chinese origins

«China and the Western countries have definitely cultural codes which are very different, relating to work, family, happiness. There is a real gap between the Chinese values and world's concepts, and the Western's one»12 (Mrs Mengchao Yang)

The way a firm is operating is deeply linked to its culture. Indeed, socio-cultural values are a major aspect of the firm's environmnent, owing to they affect perception, behavior, thinking patterns and business practices. More particularly, Western and Eastern

12 See Appendix I.C.

2013 19/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE mindsets, and so management methods, highly differ, as Mrs. Yang confirmed to me. This is highly true for Baidu, as we are going to see in this second sub-part. Three points will be broached: the impact of culture on the mangement of firms, the influence of both Confucianism and Sun Tzu's Art of War on the functioning of Baidu, and finally the presence of Silicon Valley's mindset in the Chinese search engine.

1. Links between management and culture

Each business manager interprets differently the market needs. Indeed, his or her perception is deeply built from his or her cultural background. This leads to different thinking patterns and business pratices, and therefore it has a fundamental impact on the way a firm is managed. As soon as 1980, Geert Hofstede has shown that the management methods are deeply lied to culture, in his book Culture's Consequences: International Differences in Work-Related Values. In the same way in 1991, in his book Cultures and Organizations, Hofstede states that 50% of differences in management attitudes, believes and values are explained by national cultures. Indeed, it can be said that the cultural background of a manager is built both by his national culture, but also by his cultural experience outside his country. According to Roath et al., national culture refers to deeply set of values, that are common to the members of a nation and constitutes a system of shared norms, values and priorities, a code of expected bahaviors in that society.13 In the case of Baidu, the Chinese culture is highly present in the way the firm is managed. But the cultural backgroud of the founders, Robin Li and Eric Xu, is also made of their experience abraod, namely their studies in Silicon Valley. They brought with them some thinking patterns typically occidental, and which have contributed to the success of Baidu.

13 Quoted in: LAROCHE Michel. «Impact of culture on marketing strategy: Introduction to the special issue». Journal of Business Research, 2009, vol n° 62, p. 922

2013 20/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE 2. A reminder of basis of the Chinese culture: Confucianism and Sun Tzu

For several years, it has been talked about the «Chinese-style success», and therefore about an efficient Chinese management. Baidu is one among other examples of these national champions, which are deeply influenced by the Chinese mind. Indeed, even the current «Chinese-style management» has borrowed a lot from the American and Japanese system of management, it is mostly built on Chinese values. Therefore, in order to understand this distinctive strategic thought, it is necessary to get the Chinese thought from the inside, that is both the Confucianism and the principles told by Sun Tzu in The Art of War.

• The key role of Confucianism in the Chinese way of life: a mindset focused on the human

In China, values are furthered socially and through tradition, since they have not been driven by religion. More especially, the Chinese philosophic base is Confucianism, which was born in The Fifth Century before Christ. It is applied to politics, ethnic, professional and personal relationships. Since the eighties, it has been gradually claimed as a national doctrine. The core of this thought is morals advising knowledge, trust, tenacity, loyalty, filial devotion, kindness and justice. Each of these values is linked to the human, and are interdependent. The goal of the Confucianism is to reach a hierarchical social order harmonious and fair, in order to keep the individual and community peace. In the individual level, the Confucianism means the search of excellence, perfection and efficacity. In the collective level, the values of the Confucianism can influence the system of management. Thus the control by the hierarchy and more generally the implicit control through the respect of social rules are naturally applied.14 For example, the respect of loyalty, trust and hierarchy are taken into account in the career management.

14 EGLEM Jean-Yves, LAULUSA Léon. «L’impact des valeurs confucéennes sur le processus de contrôle de gestion dans une entreprise d’État Chinoise». Comptabilité – Contrôle – Audit, 2011, tome 15, p. 11

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• The strong influence of Sun Tzu on the business startegy

Secondly, the principles claimed by the general strategist Sun Tzu in The Art of War have deeply influenced the business strategy, both in China and in the world. This Chinese military treatise was written more than 2,500 years ago. It has long been heralded for its advice on military success, but it has also had, and still have, a great impact on the strategic management in the business world. Some of his more known principles are the following: the importance of recognizing strategic opportunities and limiting opportunities for the enemy; exploiting one enemy's weaknesses, avoid his strengths; adapation to the environment; and the use of creativity, innovation and timing in building an attack.

Robin Li has translated principles both of the Confucianism and of Sun Tzu in the strategic management of Baidu, as we are going to see in the following point.

3. Impact of the Chinese's and Silicon Valley's minds on Baidu management

• The presence of the values of Confucianism in the Baidu's mindset

If is is looked start from its name itself, Baidu means «a hundred of times», which can be understood as «a persistent search for the ideal.» This can be linked to one of the core principles of the Confucianism, which is the the search of excellence, perfection and efficacity. It can also be said that, in a way, through the collaboration with the Chinese government concerning censorship, Robin Li puts into practice one of the most important values of the Confucianism, which is loyalty.

• The practical application of the Sun Tzu's principles: adaptation, exploitation of enemy's weaknesses, and innovation.

Robin Li has put into pratice one of the key principles of Sun Tzu: adaptation to the environment. That's a market in constant change, which is the Internet. Thus, as the CEO

2013 22/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE of Baidu underlines in an interview: «The market has exploded in a very short time. User information needs to change very quickly. Because we were local and focused we were able to catch the changes quickly.»15 The strategy of Baidu is also an application of an other Sun Tzu's principles: exploiting one enemy's weaknesses, avoid his strengths. In this case, the enemy is clearly Google. And Baidu has succeded in exploiting its weakness, that's its lack of knowledge and understanding of the Chinese market. But Baidu has also stratigically chosen not to position itself on the same segment that Google. Indeed, whereas the goal of Google is to further the integration of global information, Baidu remains focused on search services. Moreover, Baidu has chosen not to expand itself in English-spoken countries, where Google highly dominates the Internet market. Finally, it can be said that innovation, one of the key principles to win a battle for Sun Tzu, is the key word of the strategy of Baidu. Indeed, almost each month since its creation, Baidu proposes a new service or a new product.

• Baidu, definitely a Silicon Valley's product: make everything to enable innovation

However, although the management of Baidu is deeply influenced by the Chinese mind, it is also a Silicon Valley import. The project of Baidu was itself born in this American high-tech place, as the co-founders, Robin Li and Eric Xu, have studied there. Today, many of the employees of Baidu come from Silicon Valley. Kaiser Kuo, Director of International Communication of Baidu, explains this proximity with Silicon Valley: «Baidu is engineering-driven, and the unwritten rule is “he who hath the greatest tech prowess hath the greatest say.” We believe in hiring the best people we can find, giving them maximum personal space, and evaluating them on their results. Exceptional talent at Baidu is given exceptionally free rein.»16 Thus, the Silicon Valley's mind is highly present in the management of Baidu, as everything is done to enable to further innovation. It can also be noticed that, inside, Baidu intentionally evokes the openness of Silicon Valley: the

15 WATTS Jonathan. «The man behind China's answer to Google: accused by critics of piracy and censorship». The Guardian, published on 8th december, 2005. Available on: http://www.guardian.co.uk/technology/2005/dec/08/piracy.news?INTCMP=SRCH

16 Forbes. « What is the internal culture like at Baidu ? » Published on 29th March, 2013. Available on : http://www.forbes.com/sites/quora/2013/03/29/what-is-the-internal-culture-like-at-baidu/

2013 23/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE facility boasts a basketball court, waterfalls, a yoga studio, a gym, and a Western restaurant. Workers are expected to address CEO Robin Li by his first name, and even high-ranking executives rarely have offices. Last but not least, Baidu has opened in april 2013 a lab in the heart of Silicon Valley, dedicated to research into deep learning, like Apple and Google. The goal is to propose new clever products in the future, starting from search on the functioning of the brain. This investment is also motivated by a need to get closer to the best neuroscience talent coming from universities there. Therefore, if Baidu is proudly Chinese, its origins are definitely in Silicon Valley.

As we have seen in this first part, the story of Baidu is really a feat. From a project born in Silicon Valley by two young students, it has become a giant of the Internet in China. This successful story can be attributed to an ingenious mix-strategy, made of the Chinese strategic thought (through the principles of both the Confucianism and of Sun Tzu) and of the Silicon Valley's mindset (that's the the spirit of innovation). And in april 2013, this method still works well, as the Baidu Q1 2013 earnings show: its quarterly revenues reach $961 million (that's a rise of 40% from the same period in 2012) and its operating profits reach $355.9 million (an increase of 5.7% Q1 2012). And with a Chinese market share which is around 70%, Baidu remains the leader search engine in China. It has to be noticed that China has over 1.3 billion people, and only 513 million Internet users. Therefore, there is a great potential for growth here for Baidu. However, if Baidu growth is still phenomenal, there are signs that Baidu’s growth and market share is on the decline. Indeed, other Chinese search engines like Qihoo 360, Sogu or Tencent are winning shares, at the cost of Baidu. Therefore, competition from these new players pressuring Baidu to change its strategy. And that means to expand outside from China. But the fact is that, if everyone in China knows Baidu, outside China it is far from a household name. This is the object of the second part of this academic search: which is the strategy of Baidu to manage to success in its internationalization?

2013 24/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE II. A look turns towards the world: internationalization, the crucial bet of Baidu for its future

«Our goal is clear: to become a universally recognized brand in over half the world's countries»17 (Robin Li)

In an era of economic globalization, Baidu is actively preparing to enter international markets. In an ambitous plan, the search engine is taking lessons from its experience in China to build its strategy of internationalization. When enterprises choose one strategy, they will face two options: to change themselves to adapt to the market or stick to their style and guide the market. As we are going to see in the first sub-part, Baidu has made the choice of localization. That's to adapt its services to the countries where it has chosen to set up (that's the emerging countries), according to the environment, the culture and the needs of the Internet users. But if this strategy seems promising, it will be confronted to a great obstacle: Google, the most popular search engine in the world. This head-on fight will be the subject of the second sub-part, in which it will study the «googlization» of the world, the Google-Baidu fight, and the mobiles market as a decisive battlefield.

17 CARLSON Benjamin. « Baidu, China's 'Google-killer', looks to build its brand worldwide ». Published on 9th august, 2012. Available on: http://www.globalpost.com/dispatch/news/regions/asia-pacific/china/120807/baidu-google- search-engine-international

2013 25/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE A. Becoming a global brand: the choice of localization in the emerging countries

Since Robin Li clearly claimed his goal to make Baidu a global brand, the company has already started taking little steps to realize this ambition. Indeed, Baidu is already present in Thailand, Vietnam, Singapore Bresil and Egypt. The strategy is simple: go where English is not the dominant language, build capabilities in that market, and then expand. This first sub-part is dedicated to explain the strategy of localization of Baidu. We will start by explaining the specifities of the Internet market. Then, we will study more precisely the choice of localization as the international strategy for Baidu, its markets, its means and a first assessment.

1. The specifities of the Internet market

• The Internet and its implications on business strategy.

Traditionally, multinational companies and domestic firms have needed to consider various problems about available funds, equipment, production lines or distribution channels. However, the Internet industry does not have those complications. This is because the Internet itself links the whole world. Technology, services are talents are the main considerations that enterprises need to take. Moreover, the Internet is intrisically bordeless, and so means the death of distance. Therefore, it can be said that the Internet is revolutionizing the way business is couducted, including all aspects of marketing.

• Strategy, even more important with the Internet: the input of Michael Porter.

But if the Internet has affected the strategy of firms, it does not make it less important. Quite the opposite, as Michael Porter underlines: «the Internet actually makes

2013 26/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE strategy more essential than ever.»18 He ads that « Internet brands have proven difficult to build, perhaps because the lack of physical presence and direct human contact makes virtual businesses less tangible to customers than traditionial businesses.»19 Indeed, the main goal of any firm is to win credibility and satisfaction with its customers. The fact that companies from the Internet industry can raise capital without having to demostrate viability may be an obstacle to gain this precious confidence. Moreover, Michael Porter claims that «dot-coms must develop real strategies that create economic value». According to him, the characteristics of a successful dot-com company are the following: «strong capabilities in Internet technology; a distinctive strategy resting on a clear focus and meaningful advantages; emphasis on creating customer value; and a deep industry knowledge.»20 It can be affirmed that Baidu has the three first characteristics, as it has demonstrated its power of innovation, and has chosen to develop itself in emerging countries and to position itself on search services. It is more uncertain for the last characteristic.

Therefore, the Internet market is a particular one, and asks for a particular strategy regarding internationalization. That is the object of the next point, the international strategy of Baidu.

2. Baidu and the choice of localization

• About the importance of cultural environment in international business strategy. An important question for multinational firms is how best to integrate country- specific culture into their international marketing strategy. Indeed, culture has a decisive role on the consumer decision-making process, and so on the marketing strategy. People in the world are influenced and driven by different things. That's why Baidu has decided to internationalize through the strategy of localization.

18 PORTER Michael. «Strategy and the Internet». Harvard Business Review, March 2001, p. 65

19 Ibid., p. 67

20 Ibid., p.68

2013 27/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE

• Localization: the choice of adaptation to the demand.

Localization means to learn in order to consider problems that can arise using the local society and to understand the local market and even get integrated into the local culture. In the case of the Internet market, understanding which markets have a real demand for your product enable to target interested users who will increase the likelihood of one's product/service being well received and successful.

But given that a lot of what Baidu does is very unique to China, this global strategy seems to be put into practice with difficulty. These are the main characteristics of this strategy.

a. What and why?

• A need of diversification face to a harder domestic competition.

As we have seen previously, the local competition is harder and harder in China. Therefore, Baidu has to diversify and to go outside from China. Moreover, this was a goal claimed for a long time ago, as Kaiser Kuo underlines: "The China market still has plenty of room ahead of it to grow, but from the inception of this company it was never planned as a just China company. We've always wanted it to be more."21

• Building capacities to better expand then.

The global strategy of Baidu is clear: launching only search services by adapting them to each local culture and so Internet use, in developing countries where English is not the main language, build abilities there, and then expand to other countries. Moreover, the goal is to propose only its search services in a first time and then, after having understood the field, offering its core service, which is its search engine. Thus, in Brazil, the Internet users have accessed to , which features links organized by country (movies, sports,

21 SYED Saira. « Can China's Internet firms balance nationalism with global dreams? » Published on 30th october, 2012. Available on: http://www.bbc.co.uk/news/business-19944385

2013 28/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE shopping...) and the like. In Egypt, the Internet users can find an Arabic version of Baidu Knows (a question and answer site). And in Vietnam, Baidu offers Hao123 together with Baidu Tieba (a search social media). These services were chosen because it enables Baidu to get some information about these markets, and therefore to understand the field and to gain abilities by developing an ecosystem there.

b. Where and why?

• The choice of the emerging countries: a similar environment, a growing potential, and the absence of the dominant search engines

Baidu has chosen to expand only (at least in a first time) in emerging countries. As of today's date, Baidu services are available in Vietnam, Thailand, Egypt, Singapore and Brazil. The Chinese company has chosen those countries for severel reasons:

1. The country environment is a similar state.

2. They represent growing online markets, each with an active and engaged internet population. Brazil has led the way in South America for some time, and Egypt is only second to Nigeria in Africa, when it comes to number of users.

3. They are underserved by the dominant search engines like Google or Yahoo!, which enables Baidu to offer services with a distinctive added value.

• The case of Egypt

However, if the choice of Thailand or Vietnam can be easily understood, given the similarities in culture, language and geographical proximity, it is more difficult to get the choice of the other countries. Notably, deciding to expand in Egypt, which is in a serious political turmoil and given the cultural gap between the Arabic and the Asian culture, may be considered as suicidal. But when it is taken a close look, it appears to be a relevant choice. Indeed, by setting up to Egypt, the Chinese firm will gain abilities in Arabic, the same that is spoken in parts of North Africa and Iraq. Moreover, Egypt is the culturally

2013 29/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE dominant country in the Middle East, in terms of production of literature and movies. Finally, there is an important proportion of engineers in Egypt.

• The choice of avoiding the Western countries.

Political relations between China and the countries targeted by Baidu are evidently taken into account. Given to the difficult relationships between the USA together with the European Union, and China, because of the censorship, the non-respect of the human rights and the numerous attacks by Chinese hackers, Baidu will collide with hard complications to expand to Western countries. The cultural gap between the Western and the Chinese culture would be also a serious obstacle.

• A powerful resource: the Chinese diaspora

Finally, it has not to be forgotten that the Chinese diaspora is huge (about 40 million people), making up a real “Overseas China”. This is an other powerful resource that Baidu can use in its global strategy. c. How?

In order to put into practice this strategy of localization, Baidu has developed several tools.

• Taking lessons from the Chinese experience: the mastery of the two markets.

Before anything else, Baidu counts on its experience in China. Indeed, according to Kaiser Kuo: «In China we are in two markets at the same time. We have the developed world market in firstier cities and we are very much in the mainstream of technological developments globally. We also serve a developing world market already with a relatively unsophisticated user base with relatively unsophisticated consumers. So we are really good at developing technologies and products that are appropriate for those sorts of

2013 30/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE markets [the emerging countries]»22. Thus, the abilities got from the positioning in these two Chinese markets would help Baidu in its globalization.

• Developing skills in languages.

Baidu has created a joint research lab in Singapore on natural language processing for Thai and Vietnamese, as well as Arabic and Portuguese. An other lab of this kind has to be opened in Sao Paulo (Brazil). These language ressources will enable Baidu to extend its Web services to the Southeast Asian, Latin American and Arabic markets.

• Finalising key partnerships: , Orange, and maybe Facebook.

Baidu has signed several key partnerships. The first was in july 2011 with Microsoft. The agreement lets Baidu users see English search results generated by the U.S. company’s Bing technology to users in China. It enables Baidu to have access to a first- class English language search engine to handle the growing number of English queries it receives, and therefore to diversify internationally and to vary its activites. It should be noted that Microsoft is almost certainly required to censor English-language search results sent to users in China.

The second partnership was an exclusive deal (for one year) signed in january 2013 with Orange, to co-develop Baidu mobile browser on Android sold in Africa and the Middle East. That's 19 countries where Orange operates in the region. This agreement was very important for Baidu, because it enables to demostrate to investors that it is credible concerning its mobile business internationally. Although for now this deal deals only with what Orange is doing in developing markets, it does not prevented from the possibility of extending the service into what it does in Europe.

Last but not least, it would appear that Baidu would conclude a partnership with Facebook. But as of today's date, these are only rumours.

22 MAHAJAN Neenlima. «Growth engine: China's search giant Baidu ». Published on 12th march, 2013. Available on: http://knowledge.ckgsb.edu.cn/2013/03/12/technology/growth-engine- baidus-global-expansion/

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• Development of English services in the view of expanding to the Western market.

Several signs show that Baidu is looking for implementing in English-spoken countries, despite of its statements to target only the emerging countries. Indeed, in february 2013, Baidu started to translate its developer tools and resources into English and lauched an antivirus application for Windows, in English. This new site is the first time that it is being marketed solely in English to a potential global usership. Besides, it appears that Baidu is looking for recruting British brands to become advertising partners. Finally, it is important to notify that in 2010 Baidu hired Kaiser Kuo as Director of international communications in order to improve the image of the Chinese firm internationally and to the world knows it. And especially to trust Baidu. Thus, cultivating an international profile of its managers is an integral part of the global strategy of Baidu.

d. Failures Despite the fact that this strategy seems to be very promising, as it takes into account the local specifities of each market where it decided to establish, Baidu has suffered from several setbacks.

• The case of Vietnam. The launch of Baidu Tieba in Vietnam has had a very negative reception. Indeed, local media have reported many sceptical opinions, as well as claims alleging that the site of Baidu is infected with malware. The Chinese firm did not answer to these charges. This has highly affected the credibily of Baidu.

• The case of Japan. In 2007, Baidu has chosen Japan as the first country of its strategy of internationalization. This was a heavy defeat, for several reasons. Firstly, the Japanese have a different preference in their search from the Chinese, which give priority to entertainment. Therefore, the ranking system of Baidu was not adapted to their needs.

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Secondly, the political backgroung would have to be taken into account. Indeed, China and Japan have tensed relations for a long time ago, given to territorial claims and to the fight for being the leader in technology. Thus, the two nations recently argued about the property of the Senkaku islands. As the result of the protests of the Chinese, Baidu’s search engine (which clearly made public its nationalism on its website) was purely and solely boycotted and traffic dropped. The last reason of this flop of Baidu in Japan was owned to the fact that this is a very mature market, where the giants Google and Yahoo are already well established.

• The case of Russia. Baidu also failed in Russia. This time, it was especially because there is alrealy a giant local search engine, Yandex.

All of these failures have highly affected the credibility of Baidu, both near to the Internet users globally speaking and to investors. And therefore, it could question the strategy of localization of Baidu. Kaiser Kuo assured during our interview that « we (Baidu) have learned from these mistakes. They enabled to us to improve our strategy of internationalization, and to better unterstand the needs of our customers.»23 The success of Baidu in Brazil and Egypt seems to approve this claim. However, the question of the credibility and the satisfaction of the customer remains a crucial stake for Baidu. The Chinese firm has a long way to cover again, particularly if it wants to be considered as legitimate as Google in the Internet market. That's the object of the second sub-part.

23 See Appendix II.B.

2013 33/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE B. Google VS Baidu: a merciless and global battle for the Internet market

On the 1st April 2013, the news made high waves: Baidu announced that it was working on its own smart glasses technology, using facial recognition. That is, exaclty the same as the Google's Glass project, announced one year ago. For some, this was only an April Gool's joke. Actually, this was more about truth than simple rumours. And it marks an other battle in the fight that Baidu and Google have waged for almost 15 years now. In this sub-part, it will be firstly dealt with the domination of Google in the Internet market, then the features of the battle between Google and Baidu, and finally mobiles as the next battleground between the two giants.

1. The «googlization» of the world

• An original search engine product.

When it was launched by Larry Page and Sergey Brin in 1998, the search engine distinguished from others by ordering the search results by relevance. In 2000 it allowed users to look for references in their own language, by starting with ten European languages. This was the start of creating a global brand.

• The developing of its own browser: from a search engine to an adevertising company.

The American search engine has succeded in extending its influence on the world by developing its own browser, with products such as , ,, Street View, and Google +. The repurchase in 2006 of Youtube, the first video-sharing website in the world, has completed what can be called the «googlization» of the world. Thus, Google is together a Web search-engine service, a general media company, a company and, first and foremeost, an advertising

2013 34/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE company. Indeed, Google has succeded in advertising efficiently on the Internet in aiming at people where they need Google, that's when they are looking for information.

• The global influence of Google.

As David A. VISE and Mark MALSEED underline: «There is an universal attraction for Google, because it supplies free and reliable information. It enables Google to overcome the cultural, linguistic, and geographic differences to become a global tool.»24 An example of the global influence of Google is that the name of the firm has become a verb in English, Deutsch and other languages, meaning «to search». Google is considered by many to be not only changing the Internet, but also the world. None other brand reaches so quickly this global recognition as Google does. However, many people cannot have access easily to Google. That's the case of China, which was crucial for the American search engine, because of its great potential of Internet users.

• The serious setback in China.

In 2006, Google launched Google.cn. Because it was based in China, it works quickly and was tailored to local needs and search habits. But when Google set up in China, it has much less data than Baidu, and so it could not customized its services as much as Baidu did. Moreover, Google.cn offered at this time fewer search services and products that Baidu did, especially relating to entertainment, which is the main Internet use in China. Furthermore, Baidu proposed search services in simplified Mandarin, whereas Google had to translate many of its tools into Mandarin. More than language, it is also about nationalism, which is strong in China. People there prefer Chinese firms to any forein companies, precisely because it's Chinese. Finally, Google faced up to a harsh impediment: the Chinese government. Indeed, in China, the state clearly runs the Web. And the establishment of an American giant, competiting with its national champion, threatening the Great Firewall, was unacceptable. In early 2010, Google surrendered. As Siva VAIDHYANATHAN points out: «Google surprised the world by giving the Chinese

24 MALSEED Mark, VISE David A. The Google story. New-York: Pan Books, 2008, p.36

2013 35/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE government exactly what it wanted: Google shut down its Chinese-based search engine while leaving intact those portions of its business that supply jobs and revenue to Chinese nationals».25 Therefore, as it is suggested in this academic research, the Baidu-Google fight is really taken place in a politcal background. Google redirected its Chinese users to its Hong-Kong-based search service. However, the Chinese government censors and often blocks access to Google.com.hk. This serious setback only rekindles the battle between Google and Baidu. A merciless and global battle for the Internet market.

2. Google VS Baidu: the confrontation of two giants a. From the beginning, a deep mistrust between the two firms

The deep mistrust between Baidu and Google began as soon as 1996. As it has been said in the introduction, Robin Li and Larry Page were then students in Sillicon Valley. This year, Robin Li created an algorithm to order search listings on the Internet. He called it RankDex. A few time after, Larry Page patented a very similar algorithm, PageRank, which became Google. Robin Li is still claiming the paternity of this algorithm. The suspicion has taken roots. The story goes on a few years later, in 2004. Google was then an investor of Baidu, as it owned 2,6% of the Chinese firm. This year, Sergey Brin and Larry Page visited Baidu's offices during a visit to China. The Baidu team scheduled the meeting during a national holiday when the office would be empty, so the Google executives could not see how many engineers Baidu employed. Furthermore, Brin and Page declined to eat the sandwiches Baidu served for lunch. The mistrust between the two giants was definitely set up, and it is at its highest point today.

b. Similarities and differences between the two business models

Altough Baidu is nicknamed «China's Google», when it comes to strategy, Baidu has adopted a clear different approach. Indeed, different ideologies determine different

25 VAIDYANATHAN Siva. The Googlization of Everything (And Why We Should Worry). Los Angeles: University of California Press, 2011, p.28

2013 36/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE development paths for firms. Therefore, there are several differences between these two strategies.

This discrepancy begins with their positioning. Indeed, Baidu remains focused on Internet services, with distinct local attributed. On the other hand, Google is based on integration of global information, in order to facilate information sharing and bolster productivity for firms. Thus, Google provides innovative services, whereas Baidu stays focused on search services.

Secondly, the two search engines differ relating to advertising. Indeed, Baidu offers paid search placements, which is not offered by Google.

Finally, Baidu and Google did not have adopted the same strategy of internationalization. Google has chosen a strategy of globalization, by launching generic products in numerous markets at the same time. On the other hand, Baidu has favoured a strategy of localization, by proposing its services in a few emerging countries, before expanding.

c. Mobiles: the next (and decisive) battleground

In order to maintain their position, Google and Baidu have both built their mobile assets, leading to an other confrontation between the two giants. This will be certainly a decive fight, as building for mobile is essential for these two Internet firms, which want to transalte their dominance from the computer to the mobile and tablet world. Indeed, cellphones are growing at the rate of 1 billion a year and smartphones are expected to reach more than 400 million units by 2013. This is a huge revenue opportunity for both Internet firms. But making profits on mobile services is also a risky bet for both companies, as they depend on advertising revenue.

• Google and «Mobile first».

In july 2010, Google CEO Eric Schmidt announced that more of his company's focus is now on smartphones than on desktops. He summed this up with a new motto: "Mobile First". This deep watershed was decided as the Google executives' believe that

2013 37/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE mobile will be the primary way people access the site. Moreover, with a Google can not only provide search results for one's desired phrases but also mine data about soemone and provide very precise, personalized and context-aware information based on multiple dimensions. This allows Google to better follow the tastes of consumers by combining two advertising media -- the Internet and smart phones, and so to target better advertising to earn profts.

Since the beginning, Google has made its position clear – it wants to become the leader of the , not of mobile applications. In order to win this bet, the American search engine has bought in 2005 Android, an open-source designed for mobile devices. In 2007, Google founded the , that's partnerships with a consortium of hardware, software, and telecommunication companies (HTC, Motorala, , , Microsoft...) devoted to advancing open standards for mobile devices. The first Android-powered phone (the HTC Dream) was sold in October 2008. In October 2012, there were approximately 700,000 applications available for Android, and the estimated number of applications downloaded from , Android's primary applications store, was 25 billion. And since the end of 2010, Android is the world's most widely used smartphone platform, in 160 countries more precisely. It had a worldwide smartphone market share of 75% during the third quarter of 2012, with 750 million devices activated in total and 1.5 million activations per day. Google's mobile business is currently on an $8 billion revenue run rate. That's over three times bigger than in October 2011. Therefore, as Google is concerned, the bet on mobiles seems to be winning.

• Baidu and “Project Aladdin”

Baidu has launched its mobile strategy, called “Project Aladdin”, in 2012. This was decided following a simply analysis: as we have seen previously, Baidu’s main revenue source is advertising, inserted in its PC-based search results page. With PC internet consumption showing decreasing growth, it would also affect Baidu’s revenue. So Baidu’s strong move into mobile is a logical one. Baidu's mobile strategy is composed of two lines.

The first is its mobile search. Online search, in which Baidu dominated, is well suited to mobiles, with applications like maps, location-based services. The second (and the most

2013 38/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE important) is building a mobile ecosystem that will allow users to seamlessly migrate from PC to mobile, that's cloud computing. Actually, the company is in the middle of a transition from a products company to a platform provider.

Several tools have been employed to see the strategy through the end. First, Baidu is currently spending 25% of its research and development budget into mobile and cloud computing. Secondly, as we have seen previously, Baidu closed a deal with Orange to be the browser and search engine of choice, in Orange’s African and Middle Eastern markets, that's an access to 75 million subscribers for the customized Orange/Baidu browser. In this region, mobile subscriber growth is over 6% annually compared to nearer to 2% in the USA. Finally, Baidu has launched in last september Baidu explorer, a mobile browser for Android handsets, and it is available in both English and Chinese. Baidu said it aimed for 80% of China's Android handsets to have downloaded its browser by the end of the 2013.

As a first assesment of Baidu mobile's strategy, the China firm has now many products on mobile market, ranging from basic applications such as video, music, to the browser, the voice , maps and other interface services and finally the operating system (which is based on Google's Android Open Service, but in which Baidu has replaced most of the Google Apps with its own). In last February, Baidu's could service has 30 million users and one billion files. Concerning its mobile applications, it has reached 80 million users. Baidu mobile's strategy seems to be promising, but it faces up to a harsh competition, both in China (with Qihoo and Tencent), and in the world (with obviously Google, but also Apple). Thus, it can just be talked about forecasts, as Baidu mobile Internet is still in its unexamined state.

2013 39/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE III. Diagnostic

The end of this academic research is devoted to my diagnostic on the Baidu's strategy of internationalization, and therefore a return on my starting hypothesis.

Firstly, regarding the expansion of Baidu in the emerging countries, I think that it could really work. Indeed, Baidu has chosen to adopt a clever strategy of localization, that's to adapt its services according the culture of each market where it sets up. In this way, it proposes in some countries services which enables it to acquire a knowledge of the field, and has opened natural languages search labs. Thus, Baidu actually meets with success in Egypt, Brazil, Vietnam and Thailand.

However, if Baidu really want to become a global brand, it has to expand to other countries, namely the Western countries. Baidu has already shown its interest for this area, by offering services in English and looking for partners in England. But I think that it would be very difficult for Baidu to expand to the Western, owing to several factors. As any Chinese firm, Baidu will be considered first and foremost as a Chinese firm, not as a search engine. And the Western perception of China is made of mistrust and suspicion, given the non-respect of the human rights and the the repetitive attacks of Chinese hackers on the Western countries. Moreover, Baidu is known for highly contributed to the exertion of censorship. If it can be interesting for some countries which have the same political environment that China, it is just unacceptable for the democratic countries. Besides, the current domination of Baidu in the Chinese market is due to its perfect master of the local language and needs, but also to the support of the Chinese government. Baidu will have to do without this national support outside from China. Finally, the Western countries are overdeveloped countries, where Google and Yahoo highly dominate the Internet market. Therefore, I think that Baidu has to learn that making public its nationalism highly hamper its strategy of internationalization. Trust and credibility, these are what Baidu is lacking. It is fundamental that it gains them, if it wants to really become a global brand.

2013 40/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Conclusion: has Baidu won its bet?

A. Short-term scenarii: an internationalization very encouraging

1. Baidu would succeed in setting up in other emerging countries.

The strategy of Baidu has already meet success in Brazil, Egypt or Thailand. Thus, according to comScore (an American Internet company providing marketing data and analytics), Baidu is already the second-most popular search engine worldwide after Google. Almost each month, Baidu expands in other countries. Thus, in may 2013, Baidu has launched an Indonesian version of its web links portal Hao123. The Southeast Asian, African and Middle-Eastern markets having a great potential of Internet users, Baidu seems to have a promising future there, thanks to its strategy of localization.

2. A difficult spread in English-spoken countries.

As we have seen in the audit report, Baidu is already offering some of its services in English, such as a Web site for developers and an antivirus application for Windows. The goal of Baidu is not to expand only in the emerging countries, but to become a global brand. That's why these services in English were launched. But this possible implementation in the Western area will be very difficult for Baidu, given political and cultural factors, together with the domination of Google and Yahoo in these countries.

2013 41/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE

3. A fundamental transition from a products company to a platform provider

Baidu's mobile strategy is an integral part of its international strategy. The partnership with Orange in the African and Middle-Eastern countries matches this project. If the Baidu's mobile strategy could work in the emerging countries, here again, it will meet with impediments in the Western countries. This time, because of the domination of both Apple and Google (through Android). This is especially as a crucial strategy for Baidu that it is moving to a platform provider. If the Baidu's mobile strategy fails, it could threaten its strategy of internationalization, but also the survival of Baidu itself. Thus, Baidu would have to provide a value proposition different from those that competitors offer. Currently, there are some rumours about a possible partnership with Facebook will give a strong asset to Baidu. The future will say if Baidu will win this bet. Or not.

B. Future of Baidu from a global perspective: Baidu VS Google, who will win?

The Internet market, but also the mobile market, are destined to be a real battlefield between Baidu and Google. Baidu has already succeded in demonstrating that it is more than a simple clone of Google, even if many of its features are inspired from the American search engine. The fact is that Google is at least twenty years early from Baidu regarding innovation capabilities. Above all, Google has a precious asset that Baidu has not: trust, and credibility, both with its investors and its customers. Even if the future of Baidu seems very promising in the emerging countries, it is more complicated for the rest of the world. If Baidu succeeds in gaining these two elements, trust and credibility, then it could be a serious competitor for the global fight against Google. As of today's date, Google remains the leader on the Internet market. But will it be again in five years? Baidu holds all the cards.

2013 42/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Bibliography Books  ARSENE Séverine. Internet et politique en Chine. Paris: Editions Karthala, 2011, 240 p.  HASKI Pierre. Internet et la Chine. Paris: Editions du Seuil, 2008, 120 p.  MALSEED Mark, VISE David A. The Google story. New-York: Pan Books, 2008, 336 p.  VAIDYANATHAN Siva. The Googlization of Everything (And Why We Should Worry). Los Angeles: University of California Press, 2011, 280 p.

Articles from newspapers and periodicals  ARSENE Séverine. «Chine: Internet, levier de puissance nationale.» Politique étrangère, 2012, pp. 291-303.  EGLEM Jean-Yves, LAULUSA Léon. «L’impact des valeurs confucéennes sur le processus de contrôle de gestion dans une entreprise d’État Chinoise». Comptabilité – Contrôle – Audit, 2011, tome 15, pp. 7-29.  GAUTHIER Ursala. «Les deux visages de Baidu, le 'Google chinois'». Le Nouvel Obs, published on 7th june, 2012. Available on: http://tempsreel.nouvelobs.com/economie/20120607.OBS7916/les-deux-visages- de-baidu-le-google-chinois.html (visited on 22.11.2012)  GRESILLON Gabriel. «Baidu: le succès du 'Google chinois'». Les Echos, september 2012. Available on: http://www.lesechos.fr/25/09/2012/LesEchos/21277-152- ECH_baidu---le-succes-du---google-chinois--.htm (visited on 22.11.2012)  LACY Sarah. «Google V. Baidu: It's Not Just About China». TechCrunch, published on 13th december, 2010. Available on: http://techcrunch.com/2010/01/13/google-v-baidu-it%E2%80%99s-not-just- about-china/ (visited on 21.01.2013)  LAI Linda. «In search of excellence – Google VS Baidu». World Academy of Science, Engineering and Technology, 2011, vol n° 60, pp. 1108-1111.  LAROCHE Michel. «Impact of culture on marketing strategy: Introduction to the special issue». Journal of Business Research, 2009, vol n° 62, pp. 921-923.  MILLWARD Steven. «Baidu Looks Overseas Again, Offers Antivirus App in

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English». Tech in Asia, published 4th march, 2013. Available on: http://www.techinasia.com/baidu-antivirus-app-english-worldwide/ (visited on 15.03.2013)  NTCHOUM J.P. «Orange et Baidu lancent un navigateur web pour les smartphones». Next-Afrique, publié le 15 janvier 2013. Available on: http://www.nextafrique.com/sciencestech/technologie/2290-orange-et-baidu- lancent-un-navigateur-web-pour-les-smartphones-en-afrique (visited on 22.02.2013)  ONG Josh. «Baidu courts overseas partners with new English-language developer site». The Next Web, publié le 27 février 2013. Available on: http://thenextweb.com/asia/2013/02/27/baidu-courts-overseas-partners-with-new- english-language-developer-site/ (visited on 01.03.2013)  PORTER Michael. «Strategy and the Internet». Harvard Business Review, March 2001, pp. 62-78.  SHU Catherine. «Baidu Is Building Its Mobile Strategy But Says Don’t Discount PC Yet». TechCrunch, publié le 27 novembre 2012. Available on: http://techcrunch.com/2012/11/27/baidu-is-building-its-mobile-strategy-but-says- dont-discount-pc-yet/ (visited on 11.12.2012)  SU Jean-Baptiste. «La fabuleuse histoire de Baidu, le Google chinois». L'Expansion, publié le 25 novembre 2010. Available on: http://lexpansion.lexpress.fr/high-tech/la-fabuleuse-histoire-de-baidu-le-google- chinois_243506.html?xtmc=baidu&xtcr=3 (visited on 22.11.2012)  TSIRULNIK Giselle. «Understanding Google’s mobile ambitions and what it means for marketing's future». Mobile Marketer, published on 14th november, 2011. Available on: http://www.mobilemarketer.com/cms/news/strategy/11389.html (visited on 01.04.2013)  WATTS Jonathan. «The man behind China's answer to Google: accused by critics of piracy and censorship». The Guardian, published on 8th december, 2005. Available on: http://www.guardian.co.uk/technology/2005/dec/08/piracy.news? INTCMP=SRCH (visited on 22.11.2013)  WEE Willis. «How Mobile Is Now Part of Baidu's Revenue Equation». Tech In Asia, published on 5th september, 2012. Available on: http://sg.news.yahoo.com/mobile-now-part-baidu-revenue-071034579.html (visited on 01.04.2013)

2013 44/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Sources  About Baidu: http://ir.baidu.com/phoenix.zhtml?c=188488&p=irol-homeprofile  BBC. Disponible sur: http://www.bbc.co.uk/  Forbes. Disponible sur: http://www.forbes.com/  Les Echos. Disponible sur: http://www.lesechos.fr/  TechCrunch. Disponible sur: http://techcrunch.com/  Tech In Asia. Disponible sur: http://www.techinasia.com

2013 45/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE Appendices

These appendices represent the testimonies that I have collected all along my search. The goal was double: understanding the Chinese culture, in order to understand how Baidu thinks and in which environment it has developed, and getting the strategy of internationalization of Baidu.

For my first aim, I have interviewed three Chinese students and Mrs Mengchao Yang, who works at Sciences Po Rennes and who comes from China. The documents presented in these appendices regarding these testimonies are the following:

• My interview sequence: the questions are about both the Chinese culture and the use of Baidu.

• The answers of the Chinese students

• My interview with Mrs Yang

For my second aim, I wanted to get into Baidu. No one can explain you the strategy of a firm than the firm itself. That's why I have written to Kaiser Kuo, Director of International Communications and spokesman of Baidu. Further to this demand, I had a telephone conversation with M. Kuo, about the strategy of internationalization of Baidu. The documents presented in the appendices concerning this interview are:

• My letter to Kaiser Kuo, asking for an interview.

• The transcript of this interview.

2013 46/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE I. Appendix 1: understanding the Chinese culture

A. The interview sequence

• Chinese culture 1. What are the main differences between the Chinese and Western cultures according to you? In terms of human relations (the way of greet each other, of express one's opinion, one's feelings...), habits, education and religion? 2. Norms (relating to morales, clothes) are they highly different between the two cultures? 3. What are the similarities between the Chinese and Western culture? 4. Are there particular norms for work in China? 5. Have Confucianism and its principles an influence in your daily life? 6. Have you classes in China about the Western countries, their culture, their language (english especially) and their history? 7. For communication, do you have some difficulties to express some concepts or ideas in French or English, that you have not in Chinese?

• Baidu 1. Do you use Baidu? If yes, how often? 2. Do you use other search engines? If yes, which are their advantages and drawbacks regarding Baidu? 3. Why do you use Baidu? 4. Do you like this search engine? Why? 5. Have you some problems to access to information on Baidu (for international politics for example)?

2013 47/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE B. Answers of Chinese students to the interview sequence

• ZHIFAN

I use Baidu mostly for Chinese information. For international information, I use Google because information on Baidu are not clear nor efficient.

I like also using tools for music or movies. There are a lot of these services on Baidu, and they are more complete and efficient than Google.

I don’t really like Baidu, because their information sometimes are not true. Besides, a lot of information are deleted by the government. Information are definitely too much controlled by the government.

The more important problem is the access to information. Sometimes Google is out of order, because the government cuts the access to this search engine. But at the same time, it’s difficult for the Internet users to find political information on Baidu (or rather true political information), because of the censorship.

• TINGYING

When I am in France, I use more Google than Baidu, but it is the opposite when I am in China. I like especially Baidu Zhidao, we call it “the lady who knows everything”. It’s really useful, you can find the answers to your questions in every area.

I use Google when I do search in French or English, because I think que Baidu is for China, and Google is the opposite of Baidu.

I use especially Baidu for downloading music, and for its services such as Biadu Zhidao or

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Baidu Cloud.

I Like Baidu. I think it is a search engine really made for the Chinese. It matches with our habits, it knows our society and our mentality, so it is very local and useful for us, the Chinese.

If I am looking for sensitive things, I use Google, because of the filtration of the information by the Chinese government. But I think that the filtration of the information is not entirely negative, it’s mandatory. Today, other governments have also started filtration of information.

• WANLU ZHOU

I use Baidu, but much less than Google.

I use Google for the international information, Baidu for the national information. Google is better than Baidu, it’s obvious.

I use only Baidu for music, social networks and blogs.

I don’t like Baidu. Information on it is too much limited. It’s probably because of the censorship.

It's obvious that there is censorship, especially for information considered inappropriate politically by the Chinese government, such as the Cultural revolution, Tienanmen in 1989...

2013 49/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE C.Interview of Mrs. Mengchao Yang

• What are the main differences between the Chinese and Western cultures according to you?

Mengchao Yang: The Chine like union, community, and above all, harmony. That’s why the most important values for the Chine are collective values, like work and family. If we take the example of work, it means creation for the Chine (creation of wealth, but also of products and services). It’s through the work that the individual fulfills himself. Furthermore, for the Chinese the individual is not important, it’s the group which counts. Finally, the Chine like concrete. In the same way, materialism is important in the Chinese culture, because it’s a concrete sign of wealth, and therefore of success. Every game is a competition, because for the Chinese the pleasure is in winning, still because of this importance of concrete things.

• What are the consequences of these cultural differences in business?

M.Y: The way of thinking a project is highly different. The Chinese see the globality of the project above all. For example, for building a road, they do all the steps in the same time, and then tie them together. Moreover, as the human relations are different between the Chinese and the Western cultures are different, the business practices are also different. For example, the Chinese give a great importance to trust. That’s why negotiations with the Chinese take a long time, because they are in a long-term perspective and they need to well know their interlocutors before signing a partnership.

2013 50/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE II. Appendix 2: understanding the strategy of localization of Baidu

A. Letter to M. Kaiser Kuo for asking an interview Célia LE CORRE 8, rue Richard Lenoir 35000 RENNES [email protected] Phone: + 33 (0) 6 64 00 29 09

Kaiser Kuo Director, International Communications Baidu Campus, No. 10, Shangdi 10th Street, Haidian District, Beijing 100085, People Republic of China

Rennes, 3rd February 2013

Dear Mr Kuo,

I am currently a student in final year of Business Administration in the Institute of Political Sciences in Rennes, France. In this way, I have to lead an academic research relating to technical aspects in the development of a multinational firm. I am very interested in new technologies, especially in the Internet, because of all the possibilities it offers. More particularly, I have decided to work on the international development of a Chinese search engine, because new powerful firms come today from China. That’s why I have chosen to work on Baidu, as the leader in China and as one of the world’s leader in this field. As far as I know, Baidu has decided to expand its market to emerging countries, such as Brazil, Vietnam or Africa, as your new partnership with Orange shows it. I would very appreciate if you could provide me with any further information concerning the strategy of the international development of Baidu, and the potential of its development abroad.I understand that my request could be considered as intrusive for your company. However, it is a personal work, and I do commit myself to maintain confidentiality. Furthermore, if you wish it, I would enjoy keeping you informed on the progress of my research. I understand that your position might keep you too busy to help me with my study. In this case, I would be very grateful if you could transfer this letter to any person who might be able to help me. Thank you for your time and concern.

Sincerely,

Célia Le Corre.

2013 51/52 Towards new horizons: building the Baidu brand worldwide. Célia LE CORRE B. Transcript of the telephone conversation with M. Kaiser Kuo

• In which countries does Baidu want to set up? Kaiser Kuo: We wish to expand only in the emerging countries for now. Obviously, we want to implement in the Western countries, but only in a second time.

• What is your strategy of internationalization? K.K: We have chosen to adopt a strategy of localization. We want to adapt to each country, by taking the uniqueness of the Internet users into account. You know, we have failed in Japan and Russia. We have learned from these mistakes, and we have understood how much it is important to understand the culture and the needs of our future customers.

• What are the tools to put into practice this strategy of localization? K.K.: We have already opened a search lab in Singapore for Thai and Vietnamese languages. We have also foreseen to open a similar search lab in Sao Paulo, which will be focused on the Portuguese language. At the same time, we are conducting research on Arabic languages.

2013 52/52