By Orlaith Finnegan

Baidu was created in 2000 as just a simple search engine, but it has successfully developed into a multi-faceted site providing a range of services (a Q&A forum, its own “Wikipedia” and instant messaging). In terms of search queries, Baidu now covers more than 80% of the Chinese market while Google has struggled to reach just 11% of market share. In 2010, Google turned its back on the Chinese market following a much publicized run-in with Chinese authorities over the censorship of Google’s Chinese site, Google.cn. The closure of its office in China prompted the search giant to set up a base in Hong Kong.

Google has faced a series of roadblocks to its expansion plans in China. Access to Google+ is completely blocked and last year a software glitch was blamed for consumers not being able to access Android market, Google's online store for mobile apps. Google subsequently denied speculation that restrictions were being imposed deliberately by the Chinese government. These issues only serve to copper-fasten the dominant position of local players, who are in a better position to offer a reliable, uninterrupted service.

From a financial performance perspective, Baidu has also affirmed its position as the market leader in China. In February, Baidu announced a net income of $1.06 billion (up 88.3% on 2011), and a turnover of $2.30 billion (up 83.2%). With the local market conquered, Baidu is now looking beyond China's borders to South East Asia in an attempt to encroach on Google’s market share in the region. Baidu has just recently announced its intention to open a state-of-the art R&D centre in Singapore. A spokesperson for Baidu said that the development represents an ”important step in Baidu’s commitment to enhance its products in Southeast Asia." While Google struggles to catch up with Baidu in China, Baidu is focused on taking a slice of Google's market share in Southeast Asia.

Since January of this year, Google has reawakened to the huge possibilities offered by China's burgeoning internet market by reopening its subsidiary. Google claims that it never abandoned the Chinese market and still retains more than 500 employees there, including more than 300 engineers. With a population of more than 1.3 billion China represents a massive opportunity for Google, even if it can only carve out a modest share of the search market. The stakes for both companies are incredibly high so this compelling clash of the titans is set to continue for some time.

About the Author

Orlaith Finnegan works at Digimind which develops competitive intelligence software that helps organizations to automate the process of collecting, analysing and publishing critical information. Digimind is essential to any organisation that seeks to enhance its market position and corporate reputation, through ongoing monitoring of market trends, customer requirements and the competitive landscape. Digimind has an international presence to serve the needs of its global client base with offices in Boston, Paris, Singapore and Rabat.