As portfolio manager of Tier 1 investments, a Motley Fool Rising Star Portfolio, my mission is to identify the best businesses in the world and invest in them at attractive prices. One of the ways I do that is by searching through hundreds of companies and adding a select few to my watchlist. Then from my watchlist I select what I believe to be the best of the best to add to the Tier 1 Portfolio. Today I'm adding Baidu (NAS: BIDU) to the watchlist. Here's why.
If there's one area of the world where Google (NAS: GOOG) is being beaten at its own game, it's China -- which also happens to be the world's most populous nation and home of one of the fastest-growing economies. So who's the Internet search leader in China? You probably guessed -- it's Baidu.
But Baidu isn't just a copycat. When The Motley Fool's Global Gains team visited China in June, Tim Hanson wrote:
I thought Baidu was basically aGoogle rip-off, like so many Chinese companies, simply running an inferior copy of a Western business but gaining a competitive advantage in China thanks to its local knowledge. ... But what I saw this week at Baidu's sprawling corporate campus in Beijing's Haidian District has me changing my tune. I still don't think Baidu is up to par with Google on the tech or innovation fronts, but the young, flat, and hungry organization is getting there. Baidu is a learning machine, and the company's vision and corporate culture are light-years ahead of its Chinese Internet peers.
There's no denying that Baidu benefited tremendously from Google's feud with the Chinese government over Internet censorship. Baidu has increased its market share to over 80% of the Chinese Internet search market since Google left China, but the main question is whether Baidu can maintain its lead in search if or when Google returns to the Middle Kingdom.
That's what I'll be trying to determine going forward, but in the meantime I'd be interested to hear what you think. Will Baidu be able to maintain its lead in the Chinese Internet search market? Let me know your view in the comments section below.
At the time thisarticle was published Joe Tenebruso manages a real-moneyRising Star Portfoliofor The Motley Fool and is an analyst for the Fool's Million Dollar Portfolio and Income Investor premium services. Joe owns no shares in any company mentioned above. The Motley Fool owns shares of Google.Motley Fool newsletter serviceshave recommended buying shares of Baidu and Google. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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