Baidu Inc reshapes its e-commerce business
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Youa is a e-commerce website of Baidu Inc, China's search engine giant. |
Baidu Inc, China's largest search engine by market share, is reshaping its e-commerce business after failing to gain the upper hand in the country's booming online-shopping market.
The company is transferring sellers on Youa, its e-commerce website, to Yaodian100.com - in which Baidu holds a stake - and Rakuten.com.cn, a website run as a joint venture between Baidu and Japan's Rakuten Inc, according to a notice on Youa's website on Thursday.
Baidu will close the management and transaction functions it provides for Youa merchants within one month, said the Youa website message.
Analysts say the move signals the company's failure to challenge Alibaba Group's Taobao.com, China's largest online-shopping website by market share.
Baidu intended that Youa, which went live in October 2008, would compete with Taobao. Although Baidu dominates China's online search market, it didn't garner similar success in the shopping scene. In the fourth quarter of 2010, Taobao took more than 70 percent of the market share and Youa only 0.1 percent, according to the domestic research company Analysys International.
"Baidu should make full use of its advantages - search and traffic - while doing e-commerce business. It doesn't have to run an e-commerce website itself because it may not be good at traditional business operations, such as supply chain or customer management," said Chen Shousong, an analyst with Analysys International.
Baidu set up its joint venture, Beijing RakuBai Network Technology Co Ltd, in January, and operations are mainly conducted by the Rakuten team. The chairman and chief executive, Koichi Nakamura, told China Daily in August that said he expected the company to have 100 million users within three years.
However, the company has failed to gain a noticeable slice of the industry in terms of market share.
The country's e-commerce market reached 523 billion yuan ($79.9 billion) in 2010, more than doubling from the previous year, according to the China Internet Network Information Center, as increasing numbers of people turned to online shopping in the world's second-largest economy.
Although Baidu will cease to provide online shopping services under the Youa brand, the company said it will not shut the website down.
Chen Cheng, public affairs manager of Baidu's e-commerce business unit, said "a new platform is being developed for Youa". He added that it will also be related to e-commerce but didn't elaborate.
Baidu recently overtook the Internet conglomerate Tencent Holdings Ltd to become China's largest Internet company by market capitalization. That came shortly after a Forbes rich list said Baidu's chief executive Robin Li had become the richest person in China.
However, the company is facing a dispute with Chinese writers who have accused it of infringing their copyrights with its document-sharing platform Baidu Wenku. Meanwhile, a Chinese online encyclopedia, Hudong.com, has also alleged that the search engine unfairly blocked its Web pages in search results.
