Page 31 - How China Is Winning the Tech Race

First Boston began lobbying for Baidu to go public on the Nasdaq stock
exchange. Several other Chinese firms were listed on Nasdaq by that time,
including the digital advertising firm Focus Media and the online gaming
players Shanda Interactive and Tom Online.
On August 5, 2005, Li rang the opening bell to mark the public listing of
his five-year-old start-up. A novice entrepreneur born in a poor inland city in
China, he was understandably thrilled—and overwhelmed. He stared in dis-
belief as Baidu’s share price zoomed from $27 to $122: the best performance
on Nasdaq since the dot-com boom’s peak in 2000.
Baidu ended the year with market capitalization of $288 million, out-
ranked only by 5 of the 26 Chinese companies then trading on the exchange.
Unlike many highfliers that later crashed, Baidu’s shares have nudged up
steadily, even passing $400 by November 2007. The awe-inspiring initial
public offering and Li’s substantial stake in Baidu made him an instant mul-
timillionaire, though not in the same league as Page and Brin. Li is the twenty-
sixth richest person in China, with a net worth of $645 million, according to
the Forbes 400 Chinese ranking in 2006.
Today, not only do women cast admiring glances at the boyishly
handsome 39-year-old, but Chinese youngsters are growing up wanting to
walk in his footsteps. He has proved that tech entrepreneurship—a booming
area of China’s modern economy—is a road to riches. “Robin is a confident,
thoughtful Chinese visionary who leads his team with grace,” says Tim
Draper, founder and managing director of the Silicon Valley venture firm
Draper Fisher Jurvetson. “I would not be surprised if Robin built Baidu to be
the most valuable company in the world.” Draper is not timid about using
hyperbole, particularly when it involves Baidu, a company his firm funded.
But whether Baidu can sustain its market lead over a newly reinforced
Google in China is debatable. The company has benefited from an insider’s
advantage and a head start in the market. It’s also been criticized for ques-
tionable practices, among them establishing links to pirated music files and
downplaying search results for companies that stop advertising on its site.
Moreover, some recent tests comparing Baidu with an improved local Google
search engine have given Google the nod for better results, says the Beijing
tech consultant Mark Natkin of Marbridge Consulting Group. “Google is a
really clever company, and they have technology that’s ahead of the trend,”
he says.

Baidu—China’ s Boldest Internet Start-Up 5