1 baidu history and past success 2 localization 3 global competition 4 customization

2. OBJECTIVES
 Why MNCs do not necessarily win in the LDCs
 How local knowledge and customization of service
matter, even for companies competing on a global
tech platform
2

3. TODAY: INTERNET IN CHINA
@NYT
3

4. A POLITICAL PERSPECTIVE
4

5. HOW ABOUT THESE?
5

6. A BUSINESS MODEL PERSPECTIVE
6

7. FIT
7

8. HOW DIFFERENT WAS CHINA’S INTERNET
MARKET?
8
UnitedStates China Implications
Alternative to Internet for
info
% New users
Average age
Input
Language
English skills
Internet music
Software piracy rate
Number of credit cards
Number of mobile
phones
Time spent on result
page

9. A BUSINESS PERSPECTIVE
 Entrepreneur & his team
 Global resources & local knowledge
 Adaptation & Innovation
 Competitive advantage & Entry barrier
Knowledge
Strategy
Market
Resource
9

10. HOW DIFFERENT IS CHINA’S INTERNET
MARKET?
10
UnitedStates China Implications
Alternative to Internet for
info
Plenty None High dependence and trust of Internet
information
% New users 3% (Market is
pretty much
saturated)
35%+
growth
per year
First-time users see Internet as
IM/gaming/music
Average age 45 25 Entertainment, communities
Input Easy Hard Need IME
Language Sparse Dense Less space needed
English skills High Low Cannot access the best contents
Internet music
iTunes, iPod Baidu, PC Monetization difficult
Software piracy rate 21% 96% Ready for high-quality, free software as
service
Number of credit cards 2/person 0.02/person local e-commerce more applicable;
pay on delivery; escrow service
Number of mobile
phones
190 million 600 million Mobile Internet users never load to PC
before
Time spent on result
page
10 sec 30-60 sec Curious, exploring users want search
by click

11. UNIVERSITY OF MICHIGAN
11

12. MEXICO CITY
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13. YOUTUBE: KAIFU LEE
 http://www.youtube.com/watch?v=sgDGNPnb124
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14. TAKE AWAY POINTS
 One internet, many countries (& usages)
 User: demographics, taste and behavior
 Customers: awareness, acceptance, ways of
conducting business
 Regulations: TACIT understanding
 Tech is only one dimension of competence
 For the same tech, LDCs may use it very differently
 Many lead users who are different
 Some innovations could be customized to the U.S.
market
15
Market
Approach
: Local
Funding
Team
Business
Model
Technol
ogy