Baidu (BIDU) is best known as the leading Internet search engine in China, where it's far ahead of Silicon Valley's Google (GOOG). But Baidu, based in Beijing, also provides a number of other Net services, including an online Chinese-language encyclopedia that has recently become the most popular in mainland China. The story of how Baidu came to dominate the country's online encyclopedia business helps explain its success in search, raises questions about political expediency and plagiarism, and highlights the difficulties facing Western companies in China.
Baidu launched its encyclopedia service 19 months ago when it was presented with a unique opportunity. The Chinese government had cut off the country's access to the Chinese-language version of the online encyclopedia Wikipedia, which includes politically sensitive entries on topics such as Tiananmen Square and democracy. So Baidu launched its own online encyclopedia, Baidu Baike, which would not cover such sensitive issues. The new encyclopedia, which like Wikipedia is largely built by its users, quickly had many of the same (non-sensitive) entries used at Wikipedia, often repeated verbatim.