3. The convergence of wireless Internet with traditional Internet has also created new opportunities for the development of search engines. Baidu has already taken actions in the wireless search field.
In addition to developing the Aladdin platform, we are also aware of the fact that the wide availability of mobile phones and broadband as well as the advent of the 3G era in China are making the convergence of wireless Internet with traditional Internet inevitable. For users, "wireless" is just an Internet access mode, and they are more concerned about whether they can find the information they need faster and more conveniently. Therefore, for a search engine, there is just one mission – to provide the best search products and experiences for users by catering to their different search requirements and access modes.
Today, the strategic layout of Baidu's wireless products is already full-fledged. To keep the users' search experiences consistent, we have successfully transplanted our multiple mainstream search products and services from the Internet to the mobile Internet. Search services covering web pages, news and images; community products including the Postings Bar (http://www.baidu.com/search/post), Baidu Knows (http://zhidao.baidu.com), and Baidu Space (http://hi.baidu.com), and functional applications like weather, maps, stocks, train and flight schedules and dictionaries, are widely recognized by users. You can Baidu whenever and wherever using your PC, mobile phone or PDA. In addition, we are thinking about introducing a wireless search tool called "Baidu on Palm," aiming to create more convenient search experiences for mobile phone users. This wireless search product will also be introduced into the Japanese market this year.
Besides Aladdin and wireless search products, Baidu is also increasing its innovation effort in many other product and technology areas. At present, Baidu spends a third of its revenues on its technological innovation and product development activities each year. Our R&D input in 2008 topped 1 billion yuan. In the future, we will continue to increase investment to enhance our R&D capability for core technologies. Our goal is to provide users with the best search products and experiences catering to their diverse requirements in the context of explosive growth and convergence of information.
These are my personal views about technologies. I would also like to share with you my thoughts about some new phenomena occurring in the current social and economic development process, as well as the role the Internet and search engines play in it.
First of all, the financial crisis has a significant impact on export-oriented businesses, and search engines can help them turn to the more stable domestic market more quickly.
I mentioned at the beginning of my presentation that the impact of the financial crisis on the Internet industry is relatively small. But it is undeniable that this crisis has a huge impact on quite a number of traditional industries in China, especially the export-oriented manufacturing and processing companies. Because of dramatically shrinking demands in overseas markets, many companies originally focusing on exports have turned to developing the domestic market. In this case, the role of the Internet has become prominent. Because of the advantages in coverage and cost, the Internet – and especially the search engines – has become the first choice for many small and medium-sized enterprises (SMEs) to develop in the domestic market.
At the same time, bad economic conditions have also forced many companies to tighten their budgets and cut back on promotion and marketing spending. In this case, the search engine marketing is more suitable for SMEs to do promotion and marketing since it is paid based on results, has wider coverage, is more accurately placed and has controllable results. It has been seen as the best weapon for the country to drive domestic demand and has been accepted and recognized by more and more companies. Our survey of enterprise clients shows that after using search marketing, 90 percent of the enterprises have increased their confidence in overcoming the difficulties; 83 percent of the enterprises believe the number of their customers has increased and their market channels have become wider; 73 percent of the enterprises have increased their sales and cash flow; and 63 percent of the enterprises have improved their company web sites by taking advantage of search marketing. We can see that the support and help of search engines can greatly increase a company's ability to withstand the impact from the financial crisis and will therefore be able to help drive the national economy.
Baidu has done a lot of work in this area. Over the last few years, through search engine marketing and promotion services, Baidu has helped hundreds of thousands of SMEs become the key component of the Chinese economy. And to further help more SMEs under the impact of the financial storm, Baidu has also launched a special aid program, providing free technical support to optimize their web sites. This program has been widely received by SMEs.
This year, we have also introduced the Phoenix Nest advertising system. It is a brand-new auction system that provides users with more keyword options and tools for budget management. In addition, we provide more data to clients in the back office helping them to calculate ROI so as to improve the cost effectiveness and the results of their marketing.
Secondly, the connection between traditional economic sectors, including agriculture, and the Internet and search engines is getting increasingly closer following the financial storm.
According to Baidu's internal statistical data, sectors of agriculture, forestry, animal husbandry and fishery combined have become the fastest growing part of our search marketing clientele, which includes hundreds of thousands of clients. This is because, on the one hand, more and more individuals and companies in these industries have realized the role of search engines or the Internet. On the other hand, the penetration of the Internet is also increasingly moving from major cities to small and medium-sized cities, as well as the countryside.
Here I have a real story to share with you: At the end of last year, because of the dual-impact of the financial crisis and the "orange wormy incident" in Guangyuan, Sichuan Province, the navel oranges in Zigui, Hubei Province, became unsalable. Learning this, Baidu set up a project team to create specially designed web pages featuring local fruit farmers. We put nine keywords related to navel oranges from Zigui on our full-traffic platform and our search-marketing platform. Within just one week, these special web pages received 250,000 clicks. The salespersons received tens of phone orders a day. After more than two months of promotion at Baidu, and through the joint efforts of local dealers, the sales volume of navel oranges in Zigui unbelievably grew by 30 percent over the same period of the previous year.
There are many other similar examples. I believe with the gradual increase in Internet use in rural areas, traditional economic sectors led by agriculture will generate huge market potentials for China's Internet industry and become the engine driving a new round of growth in the Internet economy. The expansive rural market will also become the new "bonanza" for China's Internet industry. As an Internet firm, we should also do more to help the traditional sectors benefit from the development of the Internet and search engines.
Under the impact of the financial crisis, the year 2009 is proving to be one of both opportunities and challenges. I believe that with the continuing improvement of search engine technologies and the on-going efforts by many more Internet firms like Baidu, Internet application – notably search engines – will increasingly penetrate into every part of China's economic and social activities, to help China successfully weather the financial storm and push forward the economic transition toward a more advanced Internet economy. I am very confident of this.
Thank you.
Speech delivered by Robin Li, Founder, Chairman and CEO of Baidu at U.K. – China Internet Roundtable on 22 July 2009, Beijing
(China.org.cn July 22, 2009)
