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It has been said that, “great minds discuss ideas, average minds discuss events and small minds discuss people.” But any discussion about doing business in China cannot help but talk about people.

According to the China Internet Network Information Center (CNNIC) by the end of 2013 there were 618m internet users in China. This is around 46% of the population. 500m people use mobile devices to connect to the internet and 302m people are e-shoppers.

But I don’t want to focus on discussing people, although it is quite clear that is a barometer of business in China. I want to discuss some ideas as to how to connect with these people.

What ways can brands from outside China reach these people?

Is Baidu best?

An obvious starting point would seem to be Baidu, by far China’s most popular search engine. According to CNZZ.com Baidu held 59% of the search engine market in March 2014. But this dominance masks the fact that Baidu’s market share has dropped by over 20% in 18 months. In August 2012 it stood at 81%.

During this period other search engines have moved into the market. In August 2012 Qihoo 360 (so.com) had a market share of just 1.15%. As of March 2013 it had a market share of 25%. So is using Baidu for paid advertising really the best way to reach Chinese consumers?

Going mobile

This question has to take into consideration the fact that 81% of internet users in China connect via a mobile device. Mobile users have very different habits from desktop users. For example, people who shop online on a mobile phone are less likely to use a search engine instead using apps.

Alibaba Group, owner of China’s top C2C platform taobao.com and B2C platform Tmall.com, has mobile apps for both of these stores as well as having excellent search functionality on the respective websites. So instead of searching on Baidu for a product many people go straight to these platforms and put in their search terms.

This phenomenon is slightly different amongst foreigners in China. I overheard a conversation that confirmed what I already suspected. Two people were discussing buying branded watches that weren’t easily available in the local shops.

Just Google it to get the details and then search for it on taobao.

This suggests two things to me:

  1. Taobao.com is seen as a go to place once you have decided what you want buy.
  2. Google is still widely used as a search engine even though official statistics suggest that it has less than 2% search engine market share in China.

The paradox of Google

How about using Google AdWords for pay per click advertising in China? As I just alluded to, I think that Google’s search engine is much more popular in China than official numbers suggest.

The reason for this is the wide use of VPNs and proxies amongst both Chinese and foreign internet users. The problem here is getting evidence to back this up. But from personal experience 90% of my friends use some form of proxy to access sites in China that would otherwise be blocked.

I think it’s fair to say that search engine users often use Google as a place to search for foreign goods. So in the niche of foreign products and foreign brands Google still holds a lot of sway.

From this perspective I’d consider Google AdWords to still be a valid entry tool into the Chinese market. There have been many occasions at Nanjing Marketing Group that we’ve seen a business that plans to enter the Chinese market say they “need” to be on Baidu, even though they only wish to spend 5% to 10% of the budget that Baidu can support. On these occasions Google could be a better choice.

The rise of Qihoo 360

How has so.com become China’s second most popular search engine in such a short period of time? The answer lies in the fact that it is the default search engine used in the 360 internet browser. How Microsoft must wish this was the case for Bing.com and Internet Explorer.

But this by no means makes so.com perfect. It doesn’t usually provide results that are near the level of Baidu. Also, conversion rates are not as high for similar projects. What I believe the competition has done is precipitated Baidu to improve and develop faster.

Baidu is best

Baidu is without a doubt the most popular search engine in China. It still reigns supreme. It has a range of products that you can use for pay per click advertising. These products include:

  • Baidu pay per click keyword search

This is similar to Google AdWords search engine marketing platform. It usually has a lower cost per click (CPC) than Google. Setting up a Baidu PPC usually takes up to two weeks. We’d recommend using a local agency to help with translating documents and setting up Chinese language landing pages.

  • Baidu display ad network

Users of a Baidu pay per click account can also use Baidu’s content network, again similar to Google’s display network. The service has a very useful remarketing functionality built into the display network. There are 600,000 websites that partner with Baidu to display the banner ads.

  • Baidu Brand Zone

Brand Zone offers a fixed price eye-catching brand logo, company introduction and tailored content whenever the brand’s specific keywords are searched. It is a product exclusive to Baidu. It may be expensive, but with average click through rates (CTR) of 50% it’s favourably comparable to Baidu (average PPC CTR of 1%) and Google (average PPC CTR of 0.2%).

Constant development

Baidu is also improving its mobile presence. Its participation in the Tizen Association is a sign of its commitment to competing with Alibaba and Tencent in this particular area.

The company is also branching out into third-party payments solutions. Again it’s strengthening its position in the Chinese market by diversifying to be more than just a search engine.

There are a number of options if you are thinking of entering the Chinese market. I’d suggest that Baidu is still the best pay per click search engine for the reasons I’ve stated above.

Below is a recap of everything I’ve discussed with some added details:

Qihoo 360 (so.com)

  • This is now China’s second most popular search engine. In many industries it has a significantly lower CPC than Baidu.
  • The results it provides aren’t usually on a par with Baidu. Conversion rates tend to be lower on comparable projects.
  • It comes down to the niche you’re in. I recommend Qihoo 360 as an extra channel to be used with Baidu, rather than as a standalone solution.

Google AdWords

  • Considering it officially has less than 2% search engine market share, we see much greater traffic coming from Google AdWords campaigns than we should expect.
  • In some cases we see Google bringing in a third the traffic of Baidu mainly because people use Google as a place to search for foreign products and brands.
  • I’d consider using Google AdWords as a market entry if it can support your budget. Check out the search volumes on Google for the keywords you wish to promote.

Baidu

  • Baidu has the highest usage in China, a highly developed ad platform, a handy desktop editor, good security and click-fraud protection.
  • Baidu is being constantly updated so this means it is always improving and getting better.
  • It has a very useful remarketing/retargeting functionality built in to its display network.
  • Finally, it’s also important to be on Baidu for branding purposes alone. If your brand isn’t on Baidu then many Chinese Internet users won’t even consider it to be a well-known brand at all.

Have you tried to move into the Chinese market? What was your strategy? I'd love to hear about your experiences.

Misha Maruma

Published 7 May, 2014 by Misha Maruma

Misha is a Content Writer for Nanjing Marketing Group, a digital marketing agency based in China, and a contributor to Econsultancy. You can follow him on Twitter or connect via Google+ or LinkedIn.

3 more posts from this author

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Hermes Ma

Of course you want Baidu as the traffic that Google Search can bring you is not going to suffice, in most occasion, pathetic.
The budget combination for your investment if you are marching into China will roughly be like this:
30% on Baidu search (it has the biggest coverage in the Chinternet.)
20% on 360 SO search (it's developing and its avg. CPC is lower = better ROI)
35% on Baidu Display (no doubt. For demographic and psychographic targeting other than intention. Also for remarketing.)
15% on Google Display (as a mature supplement to Baidu Display)
You can start with this and tweak it based on ROI of each channel. Also if you are doing just e-Commerce in China, investing in the marketplace like Tmall or JD.com will be more practical.
Aside from language barrier, hosting your site in China and getting an ICP is a must.

about 2 years ago

Misha Maruma

Misha Maruma, Content marketer at Nanjing Marketing Group

Hi Hermes Ma. I think it's very difficult to say that there is one budget allocation that all projects should adhere to. At Nanjing Marketing Group we work with our clients to find a mix that works for them.

As far as hosting your site in China, this is incorrect. Baidu does not require foreign companies to host their site in China to set up a PPC account. Some parts of the website need to be translated into Chinese and a Chinese language landing page can help. Of course this then means you don't have to worry about getting an ICP.

about 2 years ago

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Hermes Ma, Director at Maxket.com

Hi Misha, no offense but you are misleading the audience. ICP is one of the documents that Baidu and 360 ask for when opening a PPC account. There are some rare exceptions though. ICP licenses are only issued to sites hosted in China because it is bound with a local hosting provider.
I believe you understand how critical getting an ICP is for doing online business in China. You can't do anything without it. e.g. QQ Connect, Sina Weibo SSO. You should get an ICP for your agency as well.
BTW, I never said there is only one budget allocation. Eventually, it is the ROI of each channel.

almost 2 years ago

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Tait Lawton, Founder at Nanjing Marketing Group

I can confirm that Baidu does not require an ICP license in order to sign up for Baidu Tuiguang (pay per click).

In my experience, a lot of incorrect information about the sign up process is spread by resellers. This is because some resellers don't understand the setup process for non-Chinese companies well, and some are enforcing their own rules (not Baidu's).

almost 2 years ago

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Hermes Ma, Director at Maxket.com

为了保证推广信息真实有效,建设诚信健康的网络商业环境,百度针对不同行业,制定了不同的客户资质审核要求,需要您提供包括营业执照、ICP备案、行业资质等在内的材料。具体要求况请您可以向您的营销顾问咨询。
http://e.baidu.com/faq/attend/#
They state it clearly in their official site. ICP is a must in most cases.

almost 2 years ago

Misha Maruma

Misha Maruma, Content marketer at Nanjing Marketing Group

Hi Hermes. I took no offence to your previous comment, I enjoy people responding and interacting to the information I supply. That being said, I do want to clear up this ICP issue.

The pertinent point here is the fact that for websites hosted outside of Mainland China, Baidu will not ask for an ICP licence. This includes Hong Kong too.

For websites hosted on the Mainland that want to do Baidu PPC, they will be required to produce an ICP. It is usually the hosting company that requests the ICP and not Baidu. Therefore if the website is hosted in America, then there is no requirement to get an ICP as the hosting company will not be demanding it to satisfy Baidu.

There are some caveats to add though. Certain industries might have to host their website in China. These are considered sensitive industries such as finance, tourism (flight tickets etc), medical products and education. These industries might be asked to host their websites in Mainland China if they want to do Baidu PPC.

The reason these industries are asked to host in China is so that they can be monitored closer by the authorities than say a company selling printers.

I hope this has cleared up the matter. The main issue as I see it is the fact that a company does not have to host their website in China to use Baidu PPC. But if they do host the website in Mainland China, then they will have to obtain an ICP (Internet Content Provider) licence.

almost 2 years ago

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mengzhi lee, manager at MC AG

Hi Misha, thank you for the article.
As our company is also looking forward to help clients to promote their brands on mainland China, we really want to try it out as soon as possible.

We have staffs who speak mandarin but the company itself doesn't based in China.
I noticed that the account registration requires a Chinese mobile phone number, how did you or your client deal with it?

about 1 year ago

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