Advertisers on Baidu, the largest search engine in China, appear to be losing confidence in its ability to deal with click fraud, according to a new report.

The search engine has 58% of the search market in China, compared to Google’s 17%, but the click fraud problems could help its rivals to catch up.

A study into Paid Search advertising in China, conducted by Peter Bowang Lu of the China IntelliConsulting Corp and covered by VentureBeat, reveals the extent of advertisers’ fears about the amount of click fraud taking place.

The section on invalid clicks reveals that advertisers are increasingly concerned about the practice, and believe that 34% of all clicks on Baidu are fraudulent, compared with 27.8% on Yahoo and 24.1% on Google.

Significantly for Google, advertisers are beginning to lose faith in Baidu, with 42.5% of those surveyed saying that click fraud levels are enough to discourage them from using the search engine.

Baidu also mixes up paid search links with organic search results, which is a probable cause of many invalid clicks.

For both Google and Yahoo, levels of advertiser dissatisfaction were lower, at 28.7% and 30.3% respectively. Also, more advertisers were planning to increase their marketing spend on Google than on its Chinese rival.

Google also rated higher for ROI, and its ability to deal with the click-fraud issue, while the report suggests that Chinese search engines face less pressure about the problem, and therefore less inclined to take action.

The report suggests that Baidu’s search market share and ad revenue will continue to grow, but that it is being held back by the click fraud problem, and advertisers’ perceptions of its ability to deal with the issue.

The report also characterised Chinese internet users as less web-savvy than their Western counterparts – 47.4% of those surveyed not knowing what a toolbar is. This, it says, has led to problems with malware for Chinese users.