Baidu wants to close the gap in mobile apps – and it knows just how to do it
The Chinese internet is dominated by three powerful tech titans: Baidu (the country’s pre-eminent search engine), Alibaba (the ecommerce expert), and Tencent (with specialisations in entertainment and social media). In recent times, Baidu – often called, for obvious reasons, the ‘Chinese Google’ – has fallen behind its peers in regards to mobile app usage. Now, the company wants to address that short-fall of mobile traffic, and it knows just how to do it: partnering with the world’s most-watched television show.
Baidu’s share price has risen by 3% over the past month
Source: Yahoo Finance
This year, Baidu will become the exclusive “red packet” partner of state broadcaster China Central Television (CCTV) during the Spring Festival Gala. This Gala is CCTV’s annual flagship show, recognised by the Guinness World Records as the world’s most watched television show. Last year, more than a billion people watched it – it has quite literally become a national tradition in China.
But what does ‘being the “red packet” partner’ mean? Hongbao (red packets) are a Chinese tradition, whereby people gift each other red envelopes filled with money (red because it’s an auspicious colour in Chinese culture). With the rise of the internet, hongbao has moved further online. Today, many companies in China hold “red packet” promotions, where they give out cash or rebates which customers can “snatch” through a mobile app.
This exclusive partnership between Baidu and CCTV will see the popular Chinese internet company’s app be the only one through which consumers can “snatch” red packets. And it will last throughout the Lunar New Year holiday.
This is a big, big, big opportunity for Baidu, with a potential audience of a billion people, many of whom will be eagerly using mobile phones (and Baidu’s app) to access hongbao offers. It could provide the jumping point for Baidu to catch up to Tencent (which has benefited from its billion-strong audience of daily active users) and Alibaba (which has a powerful online ecosystem driven by its Taobao and Tmall shopping apps). It’s also true that one of the ways both of these companies grew to their current size is through hongbao partnerships. So, Baidu is in good company!
Gaining greater traction in the app market is another step forward for Baidu, which has been working diligently to evolve beyond its core competency of search. Last year it became the first Chinese member of a leading artificial intelligence ethics group, and a week ago the company’s CEO, Robin Li, reiterated the company’s goal of becoming a “world-class high-tech firm.” Red packet in hand, it’s well on its way.
Dominion holds Baidu in its Global Trends Ecommerce Fund.
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