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Baidu Shines at Google's Expense

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Baidu Inc, China's largest online search engine, has benefited from rival Google Inc's recent woes in the Chinese mainland, with its earnings and market share both rising significantly over the past three months.

But analysts said that Google's performance would be more stable in the future, and it was unlikely to suffer a further big slide in market share.

Baidu's net income more than doubled in the second quarter year-on-year, reaching 837.4 million yuan, (US$123.5 million), the company said on Thursday.

Meanwhile, Baidu took a 70 percent share of China's search market by revenue in the second quarter, up 6 percentage points from three months earlier, while Google's share fell from 30.9 percent to 24.2 percent over the same period, according to the latest report from domestic research firm Analysys International.

The growth is mainly due to "a nationwide marketing program", said Robin Li, chief executive officer of Baidu.

The company said it was going to beef up investment in sales, research and development, and infrastructure after boosting its payroll by 1,100 staff to around 9,000 in the first quarter.

Baidu won advertisers from Google after the US company started redirecting its traffic to Hong Kong in March. It added 33,000 clients in the second quarter and currently has more than 250,000 customers.

Li Zhi, from Analysys International, said that Google failed to take advantage of the expanding search market "and the growing pie then fell into Baidu's hands".

China's search market was worth 2.67 billon yuan in the second quarter, up 48 percent year-on-year, according to Analysys International.But she added the gap between the two companies was unlikely to grow to any great extent because Google had its Internet Content Provider license renewed this month.

Baidu's second-quarter sales were 1.9 billion yuan, compared with 1.1 billion yuan a year earlier. The company said revenue is expected to rise 77 percent to 2.26 billion yuan in the third quarter.

(China Daily July 23, 2010)