Today, Baidu’s stock gained 52.99 points, which works out to 13.71 percent.  That’s the sort of improvement many investors would be happy to see take place over a full year, especially considering how the recession has lowered expectations.

Baidu’s stock didn’t soar in accordance with any sort of market trend, either.  The Nasdaq rose just 1.12 percent today, and the Dow gained an even less impressive 0.50 percent.  So this is just a matter of many people realizing that Baidu would perform better than ever in a Google-less China.

Google’s stock, meanwhile, was less fortunate, sinking 0.57 percent today.  Although we should note that multiple factors could have influenced both developments.  (One more side note: the numbers in the graph are off because it covers a slightly different timeframe.)

Anyway, it should be interesting to see how these stocks continue to fluctuate as the Google China drama plays out.  One way or another, it’s likely that a lot more money will change hands before the end.

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Figures related to the employees remain unknown.  Otherwise, Zhu Shenshen wrote in a Shanghai Daily article, "Under the 50 million yuan incentive program, Google will provide 500 yuan to every new registered customer of Adwards [sic], its popular online search advertising tool."

Those amounts convert to about $7.3 million and $73, respectively, in case you were wondering.

Google seems to be quite serious about getting Chinese advertisers to embrace its AdWords program, then.  While the company’s not giving away tons of cash in the grand scheme of things (Google’s current market cap: $149.5 billion), the fact that it would offer so much money to so many advertisers is undeniably significant.

Looking ahead, it’s easy to guess that Google feels the 100,000 advertisers might represent a sort of tipping point, too, after which others will glob on in an attempt to catch up.

We (along, no doubt, with many analysts and Baidu executives) will keep an eye on the initiative to see how things progress.

Lee, who served as the president of Google China’s operations, created something of a hubbub last week by announcing his intention to quit without sharing any details.  Most executives’ movements are watched, of course, but Lee’s move was even more interesting given that he was once the subject of a tug of war between Google and Microsoft.  There’s also been some controversy about his subsequent performance.

But with respect to how he did leading Google China, Lee told David Barboza, "In my career, I’ve never run away from anything – I run toward things.  There’s clear evidence Google has doubled its market share in China under my leadership.  It’s on the upturn."

So it’s on to something called Innovation Works for Lee, and he explained the new company’s way of doing things by stating, "We’re going to collect the best ideas, and we’re going to hire the best engineers and entrepreneurs.  After one year, we’ll send the companies into the open."

Innovation Works will focus on the Chinese market, and has already raised $115 million, with YouTube cofounder Steve Chen providing some support.

Lee first made headlines when he attempted to move from Microsoft to Google.  Microsoft sued Google, Google countersued, and after a fair amount of public unpleasantness, the two corporations reached a mysterious out-of-court settlement.

Then Lee’s reign in China began.  It wasn’t an entirely successful one, considering that Google’s share of the Chinese search market is still only in the neighborhood of 20 percent.  But Eric Schmidt expressed his approval of Lee’s efforts on several occasions, which counts for a lot.

And that brings us back to current events.  Lee is leaving Google to work on an unknown venture, and apparently gave the search giant enough notice to find some replacements.

Jessica E. Vascellaro reports, "Mr. Lee will be succeeded by two Google executives . . . .  Boon-Lock Yeo, currently director of Google’s Shanghai engineering office, will run engineering for Google China.  John Liu, who currently leads Google’s sales team in greater China, will assume Mr. Lee’s business and operational responsibilities."

A recent iResearch report pegged Google China’s market share at 19.8 percent in the second quarter of 2009, down 1.1 percent from the first.  The division isn’t making money, either, even as its biggest competitor, Baidu, is both gaining share and practically printing money.

So Lee told The Daily Telegraph, "We are betting heavily on the mobile market.  In five years we think there will be more mobile searches than desktop searches."

Lee later added, "Market share will depend on the extent to which mobile search takes off . . ."

Lee has been thinking about mobile search since at least October of 2007, so he may have some interesting things lined up.  Or this may be another example of a longstanding effort producing little in the way of results.

Either way, though, it sounds like Google China will be getting very friendly with the Android team.

iResearch found that over three-fourths of all searches in China (specifically, 75.7 percent) were performed using Baidu in the second quarter of 2009.  This represents a gain of 1.6 percent compared to the first quarter.

Meanwhile, Google lost a similar lump of market share during that period – 1.1 percent – which landed it at a standing of 19.8 percent for the second quarter.

And finally, Owen Fletcher reported, "Microsoft’s Bing search engine also attracted a fraction of Chinese users after it went online in early June, but Microsoft will have to continue improving the service to retain users . . . .  Bing drew 0.3 percent of the searches in China in the second quarter."

It doesn’t look like any American corporation is particularly close to taking over the Chinese search market, then.  Although they’re sure to keep trying, since the market keeps growing in size and value.

Google’s main problem is Baidu, which is as popular as ever.  Baidu’s very much on top of the Chinese search market, for example, with a share of around 65 percent depending on which source you favor.

As for Google’s music offering, which is supposed to help make the American company more attractive to China’s many young people, Bernstein Research analyst Jeffrey Lindsay said, "Chinese users will continue to utilize the Baidu service that they are most familiar with."

And all of this may have a predictable effect on the overall standings of the two corporations.  According to Eric Savitz, Lindsay "lifted his estimate on Baidu’s share of the overall Chinese ad market to 36.4% from 35.7% for 2009 and to 37% from 34.8% for 2010.  He now sees revenue growth of 33% in 2009, versus the consensus at 29%.  He adds that the company’s new Phoenix Next ad auction system appears on track for a mid-year debut and that it should add incremental monetization power."

Perhaps as a result of these comments, Baidu’s stock went up 5.81 percent today.  Google’s rose by a less-impressive 2.44 percent.

 

Let’s start with what could have been good for everyone.  Analysys found that search engines in China took in 1.53 billion yuan (or $223 million) during the fourth quarter of 2008, which represents an increase of 4.2 percent compared to the previous quarter and a year-over-year rise of 61.2 percent.  Recession or no, then, there’s plenty of money still being put into the field.

Or plenty of money for some search companies, anyway.  Baidu, China’s far-and-away search leader, saw its market share increase from 59.3 percent in 2007 to 62.2 percent.  Google, meanwhile, managed to pull off an increase at the same time, moving from 23.4 percent to 27.8 percent.

It was Yahoo that suffered as a result.  A not-impressive 2007 market share of 11.0 percent was almost halved, with Analysys putting the 2008 figure at 5.8 percent.  The corporation can’t seem to catch a break on either side of the Pacific.

Ah, well.  We’ll see how 2009 goes, perhaps catching some early clues as all of these companies give their own take on 2008′s fourth quarter over the next few weeks.

China Central Television is behind the claims.  Since it also broke the Baidu story, the situation looks rather serious.  Helping people who sell useless treatments for high prices goes way beyond any "don’t be evil" gray area.

 

But whether Google and Yahoo have followed precisely in Baidu’s footsteps remains to be seen.  A JLM Pacific Epoch article states, "China Central Television’s morning news reported on Thursday that Google China lists links for some unlicensed medical providers at the top of search results and in its right-hand sponsored links section."

Which makes it sound more like the unlicensed docs might simply be buying normal ads.  And the matter of what sort screening process should take place there is somewhat up for debate.

If anyone who can understand Chinese would like to chip in, feel free.  Otherwise, we’ll direct a hat tip to Eric Savitz and just wait to see what happens.

Since an English degree doesn’t involve much Chinese-language training, let’s turn to the English version of China Radio International‘s site.  One article states, "Internet search giant Google will provide MP3 searches in China before the August Olympics, Web site Sina.com reports."

Also, Google’s apparently found (or is at least in the process of finding) its way around all sorts of traditional legal sticking points, as "[t]he Sina.com report said Google China has agreed to share the advertising profits from MP3 searches with its partners, a similar business model to those of the search giant’s other services."

Assuming this is all true – Baidu didn’t expand into Europe, if you want an example of a rumor that didn’t work out – it looks like Google China could overcome one of the last measurable gaps between it and Baidu.  User habits and that little issue of home field advantage are the only problems that would be left in its way.

Meanwhile, the idea that the MP3 search feature would get launched in America is a fascinating, yet mostly logical, follow-through.