At the end of March, Baidu, the dominant Chinese search engine, quietly pulled out of Japan. This move was so discreet that it took an entire month for anyone to notice that the search engine part of the website had been shuttered. In an interview, Baidu admitted that they hadn’t even updated their index since 2013.
Background on Baidu in Japan
Baidu entered Japan in 2007 as their first attempt at expanding globally outside of China. Initially, there were high hopes that they could be successful in Japan, as Japanese internet users already used two different search engines, and Baidu aimed to become the second search engine. Baidu CEO Robin Li expressed that, while they hoped to replicate their success in China, they would be “very patient.” Clearly, they were, as it took them eight years to quit, even though their market share hardly budged during their tenure in Japan.
Out with the Old in with the New
While Baidu conceded defeat in Japan, they are significantly increasing their investments in other parts of the globe. Last year, Baidu entered Brazil, and they are currently operating beta versions of their search in Thailand and Egypt. However, Baidu is placing their largest bet in Indonesia, where they aren’t even running a local language search engine. Indonesia is a country many predict will be the next India or China as technology accelerates growth in a country where many people live on $1 per day. Indonesia is the fifth most populous country in the world with 250 million people and the 16th largest economy in the world. In fact, McKinsey predicts that by 2030, the Indonesian economy will overtake both the UK and Germany to become the 7th largest economy.
Baidu in Indonesia
The potential of the market makes logical sense for a big bet by any technology company, but Baidu’s approach is truly fascinating. Baidu entered the Indonesian market with a mobile-first strategy and is importing popular apps from China like the Baidu Browser alongside homegrown local tools.
They opened their first office in Jakarta, Indonesia in September 2013, and by the end of that year, they already had 3 million users in Indonesia using their optimization and security software: PC Faster. Currently, the most successful product launched is the DU Battery Saver, a battery optimization app for Android phones, which has been downloaded 14 million times.
Baidu vs. Google
A few weeks ago, I had the opportunity to attend Echelon Indonesia in Jakarta, a conference hosted by a popular Asian tech blog. The conference showcased what’s happening in technology in this fast-growing economy. While in the US, it is pretty standard to see Google as a marquee sponsor of many tech events and conferences, at this event, Baidu was the largest sponsor with Google nowhere to be found. Baidu was at the conference promoting Mobomarket, an app store for Android, which currently hosts more than 600,000 local apps.
Since Baidu has not created a search engine in the Indonesian market, they are not competing directly with Google, yet. Baidu is playing a very long game as evidenced by their focus on mobile. In a country where just 24% of people have ever accessed the internet, becoming the dominant piece of technology on the only computer many people will own—a smartphone—will allow Baidu to effectively hold the line on Google’s potential to grow in Indonesia.
I asked Baidu why, out of all countries, Indonesia is so important to them, and Bao Jianlei, Managing Director of Baidu Indonesia, provided insight:
“As we can see Indonesia is a growing market and the country has a lot of creative human resources in the digital field. That is why many digital companies from other countries come to Indonesia. Baidu wants to have a long investment in Indonesia and wants to develop the digital ecosystem here together with other players in the industry. We are optimistic we can grow in Indonesia. To achieve the target, we are focused on our localized operations. We also prioritize local features and content to meet the needs of the internet users in Indonesia.”
To that end, Baidu is heavily integrating into local culture to become almost a native digital company. They are partnering with universities, promoting local apps at startup events, and becoming the source of research about Indonesian users and their smartphones.
What Do You Need to Know
Only time will tell if Baidu’s strategies in Indonesia pay off, but in the meantime, if you are considering offering your products or services to the Indonesian market, here are three things you need to know:
1. Baidu’s investment in mobile only in Indonesia shows how important mobile is and will be in this market.
2. Baidu is investing only in Android, even though iPhones are an aspirational product in Indonesia. Entering this market with a mobile strategy means you can probably ignore iOS.
3. As more Indonesians begin using the internet, Baidu is poised to become the dominant local player. Don’t concern yourself with Google; just follow Baidu’s playbook and updates.
Featured photo by author.
