Dec. 5 (Bloomberg) -- Baidu.com Inc., China's biggest Internet search company, may need to add online shopping and mobile phone Web searching to succeed in its plan to lure users from Yahoo Japan Corp., the country's most-visited site.

Baidu yesterday said it will start operations in Japan next year. The Beijing-based company, which makes money by selling advertisements linked to its search results, said its experience with non-English languages and similarities between Japanese and Chinese will help lure users in Japan.

``It would be really difficult for a new entrant to win significant market share,'' said Yutaka Murakami, an analyst at Mizuho Securities Co. in Tokyo. ``Japanese users prefer portal- type, ready-made search engines like Yahoo.'' He called Yahoo's position in Japan ``overwhelmingly strong'' and has a ``buy'' rating on the company's shares.

Baidu's plan to expand into Japan, the world's second- biggest economy, comes as competition from Google Inc. and Yahoo for online advertising spending in China, the second-largest Internet market after the U.S., intensifies. Yahoo may pose even more of a challenge for Baidu in Japan, Hiroshi Naya, a Tokyo- based Ichiyoshi Research Institute manager, said today.

``Yahoo's dominance in the Web-based search engine market will probably continue,'' Naya said. ``Newcomers in the market may find opportunity in the growing mobile phone area.''

Yahoo Japan didn't return phone calls seeking comment.

Mobile Rivals

Yahoo's Japan unit is controlled by Softbank Corp., which also operates the country's third-largest mobile phone carrier and links the search engine portal directly to Softbank's wireless service. KDDI Corp., the second-biggest mobile carrier, on May 18 said it allied with Google Inc. to provide handset- based search services. NTT DoCoMo Inc., Japan's biggest mobile phone provider, has said it too plans to make Google available on its phones.

Baidu may also have to broaden its service to include auctions and other features, Murakami said.

``Yahoo's strength lies in the fact that it offers a multitude of services beyond searching, such as auctions,'' Murakami said today. ``Advertising will continue to be an important revenue source for search engines, e-commerce, such as auctions and shopping, is emerging as an important driver for sales growth.''

Baidu had 44 percent of the search market in the first quarter in China, according to Beijing-based market researcher Analysys International. Yahoo's share was 21 percent and Google had 13 percent.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: December 5, 2006 02:17 EST