Chinese search engine Baidu.com prepares for U.S. stock market debut

BEIJING (AP) - Baidu.com takes its name from a 900-year-old poem but its ambitions are ultramodern - to become the Chinese-language equivalent of Internet search giant Google Inc. Little known abroad, five-year-old Baidu.com says it already is the world's sixth most-visited Internet site, thanks to a strong following from China's 100 million-plus web surfers. Now the startup founded by two Chinese veterans of American tech firms is preparing to follow Google's example with an initial public offering in the United States, hoping to raise $45 million US.

Baidu.com is in the front ranks of an emerging group of Chinese companies that are trying to create Internet services uniquely suited to their country's ideogram-based language and the political restrictions of its communist government

"Here's a homegrown company that has created what really is a very strong search product," said David Wolf, managing director of Wolf Group Asia, a Beijing consulting firm.

Baidu.com was founded in 2000 by Robin Li, who earned a master's degree in computer science from the State University of New York at Buffalo and worked for U.S. search engine firm Infoseek, and Eric Xu, a Ph.D. holder from Texas A&M and a veteran of American biotech firms. Xu later left the company.

The name - pronounced "by doo" - means "one hundred times." It comes from a Song dynasty poem and refers to a man ardently searching for his lover in a festival crowd.

Google bought 2.6 per cent of Baidu.com last year in a move that outsiders thought might lead to the American giant taking over the tiny Chinese startup. But Baidu.com has stayed independent.

Google's influence shows, though, in Baidu.com's spare white site that is nearly identical to the American firm's.

By contrast, competitor 3721.com - bought in 2003 by U.S.-based Yahoo! - is a busier, colourful site with animated graphics.

Other early backers were U.S.-based venture capital firms including Draper Fisher Jurvetson and the investment arm of International Data Group. Draper Fisher is Baidu.com's biggest single shareholder, with a 28 per cent stake.

Baidu.com's IPO is modest beside the $1.2 billion that Google's public offering raised last August. But its tentative price for the block of shares being offered values the whole Chinese company at $650 million.

The company says it already makes money - some $303,000 in the three months that ended March 31.

China's government promotes Internet use for business and education. But it also has launched the world's most sweeping effort to police what its people can see online, blocking access to material deemed subversive or pornographic.

The extent of the censorship controls has been highlighted by the changes that foreign companies have made when they launch Chinese versions of commonly used services.

Free-speech activists criticized Microsoft Corp. when the blogging section of its recently launched China-based portal rejected such words as democracy, freedom and human rights, labelling them "forbidden language."

Google has also taken heat for blocking access to material that Chinese leaders dislike. A search on Google's China-based service for such topics as Taiwan, the Dalai Lama or the banned spiritual group Falun Gong returns a message that says "site cannot be found."

© The Canadian Press, 2005