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China-based Baidu Inc to turn to acquisitions to lure smartphone users to its platform

February 27
1:42 PM 2014

Baidu Inc is set to make purchases this year to get more smartphone users in China to use its services, Reuters reported.

The approach taken by the China-based Internet firm is also the same strategy that its larger competitor Tencent Holdings Ltd has employed, placing the two on a head-to-head clash. Last year, the mobile revenues of the largest Internet search engine firm in China exceeded a fifth of its overall revenue because of its $2.5 billion acquisition binge that bolstered the use of its mobile products, the report said.

Baidu Chief Executive Officer Robin Li intends to continue with this trend even if it means sacrificing this year's profits. Li said in a briefing, "Whenever there is the opportunity to do an acquisition to buy us either time or resources or talent we will be open for that." Baidu's revenues for the fourth quarter outperformed its own forecasts, increasing by over half year-on-year, the report said.

In the battle to win over smartphone users in China, Baidu has been trying to catch up with WeChat owner Tencent and e-commerce giant Alibaba Group Holding. China is the biggest smartphone market in the world with over 80% of Internet users utilizing their mobile devices to go online, the report said.

Tencent and Alibaba have poured a lot of money on purchases and seem bent on doing so, further increasing the competition for any company it has set its eyes on. In a report, Citibank Analyst Muzhi Li said Internet firms could fork out a lot of money for buyouts this year, Reuters reported.

With more than $7 billion in its war chest of September last year, Baidu is on a good footing to make acquisitions. Li said they intend to concentrate on gaming, social media and music and grow its location-based services for 2014. The company intends to integrate its map software with Nuomi, the report said. 

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