Summary of Baidu's 2019 Struggles and How It Plans to Turn Things Around

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Baidu's 2019 Struggles and How It Plans to Turn Things Around summary
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Chinese media platforms have been predicting the doom of Chinese internet giant Baidu with such headlines as, “Search Engine Baidu Is Dead” and “Baidu Is Falling out of the First Rank of Internet Companies.” The company’s first quarter 2019 performance didn’t help set the record straight, as the company reported a loss for the first time in more than a decade. This report from China Entrepreneur discusses why Baidu is in its current predicament and whether the company is making a turn for the better. 

About the Author

Li Yuan writes for China Entrepreneur magazine, which focuses on business insights and management advice from China’s entrepreneurs.

 

Summary

In the first quarter of 2019, Chinese internet company Baidu failed to make a profit for the first time in 14 years.

Baidu’s financial report shows that, in the first quarter of 2019, the company operated at a loss of $49 million, as revenues fell short of market expectations and costs increased. This was Baidu’s first quarterly loss since it went public in 2005. According to the report, Baidu is spending much more than previous years on user acquisition, bandwidth, sales and administration as well as investing more in R&D, video content procurement and content creation. The company spent a staggering amount of money on marketing and promotional campaigns. Baidu was the exclusive business partner for the broadcast of China’s New Year Spring Festival Gala. It had already spent a lot to win that bid, but during the nationally televised event, Baidu also gave away ¥1 billion [$140.8 million] in red envelopes (that is, cash gifts) to viewers via the Baidu mobile app. The investment paid off as Baidu gained a large number of new users – but took a heavy toll on the company’s financial...


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