It's remarkable. I've just read Tencent's Q4 2023 earnings report and listened to the earnings call. It's impressive how consistent they are, and it seems they have a clear vision for their future, in stark contrast to Alibaba. Regarding their cloud strategy, they reported earnings and revenue growth, attributing this to adjustments made a year ago. Alibaba has only just made these adjustments, putting them much behind the curve.
The main adjustments they mentioned in their call were ecosystem building, focusing on consumers, and low pricing. I believe that, given the current economic situation in China and the recent trend towards 'resourceful spending,' low prices are the only way they can keep pace with $PDD.
“In Chinese, there is a saying: 起个大早，赶个晚集, which roughly translates to: "Got up early but was late to the market." This phrase is usually used when talking about Baidu [$BIDU], but increasingly it should be used for Alibaba.”
I haven't closely examined Baidu for some time. However, it's commonly believed that Baidu recognizes opportunities early but then loses out to other players or at least loses market share. One example that comes to mind is Baidu's health unit, which they shut down, whereas all the other big players like JD Health, AliHealth, and Tencent, which also has a health unit (though not separately listed), are still in the game. The same goes for Qunar, which was merged with Ctrip, and iQIYI, which is also not performing well (although, to be fair, long videos in China generally don't do well, and Tencent Video is struggling too). Similarly, Baidu Maps, which was dominant (but disliked, at least in my personal experience when talking to people, so take that with a grain of salt), has now been overtaken by Gaode, the Alibaba map. Today, they are focusing on self-driving cars and AI. In self-driving cars, they were among the first movers, but now more companies and collaborations are emerging, like Xiaomi and Huawei, and it's not clear to me if Baidu is still leading. The same is true for AI - their chatbot is the best, but honestly, the others aren't even trying. I've talked to people at PDD, and they say they will wait and see. Tencent mentioned in one of their calls that AI doesn't mean chatbots, so they are focusing on applications, not a Chinese ChatGPT. Anyway, these are just my random thoughts, as I said, I'm not a Baidu expert.
Oh, I just came across this. It's in Chinese but worth reading. It discusses why focusing on profitability rather than developing large language models (LLMs) for their own sake makes sense in China.
BIDU was the earliest of BAT (Baidu, Alibaba & Tencent) to list in the US in 2005, and thus seen as the leader - it also held the highest market cap.
Apart from its flagship search engine, it also had multiple other star products such as its Tieba (a discussion forum), Encyclopedia, NetDisk, etc.
Unfortunately, it failed to monetize those appropriately, and was overly reliant on its core search engine business, which used an outdated auction-based model - advertisers would bid to be placed higher in search results. This meant that users often had to scroll past a whole page of advertising before arriving at relevant results.
Worse, this model was ill-suited to sectors such as health, in which there was (and still is) drastic asymmetry in information. Baidu's vetting and moderation process was found to be severely lacking, and it was hit by multiple PR crises.
The most well-known among those was the Wei Zexi case in 2016, in which Wei, a young cancer patient, underwent expensive & unproven treatments from an ill-reputed private provider that was masquerading as a public hospital. In China, public hospitals generally have the best reputation whereas private providers are often suspect. The treatment proved to be ineffective and he died.
Baidu tried to clean the search results up, but similar problems cropped up again and again, for example, in the sale of the Baidu Hemophilia subforum - in which patients and their families would share information on treatment and providers - to an unlicensed private healthcare provider. The latter used the subforum to market its services and also delete negative comments.
So that's why Baidu doesn't have a healthcare team any more: its internal processes and practices were simply unable to keep up. Similar issues challenged many of its businesses in which it was the prime contender, but lost touch with users due to mismanagement.
It's remarkable. I've just read Tencent's Q4 2023 earnings report and listened to the earnings call. It's impressive how consistent they are, and it seems they have a clear vision for their future, in stark contrast to Alibaba. Regarding their cloud strategy, they reported earnings and revenue growth, attributing this to adjustments made a year ago. Alibaba has only just made these adjustments, putting them much behind the curve.
Good post that I just recently saw - I included a link to it in my Monday Emerging Market Links post...: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-march-25-2024
CMBI research covers Alibaba and other Chinese stocks - I do monthly posts covering their free research: https://emergingmarketskeptic.substack.com/t/china
What were JD.com's specific strategic adjustments?
The main adjustments they mentioned in their call were ecosystem building, focusing on consumers, and low pricing. I believe that, given the current economic situation in China and the recent trend towards 'resourceful spending,' low prices are the only way they can keep pace with $PDD.
There is also a new article from Tech Buzz China which discusses the same topic. https://techbuzzchina.substack.com/p/the-collapse-of-alibabas-new-retail?utm_source=profile&utm_medium=reader2
“In Chinese, there is a saying: 起个大早，赶个晚集, which roughly translates to: "Got up early but was late to the market." This phrase is usually used when talking about Baidu [$BIDU], but increasingly it should be used for Alibaba.”
What’s wrong with Baidu?
I haven't closely examined Baidu for some time. However, it's commonly believed that Baidu recognizes opportunities early but then loses out to other players or at least loses market share. One example that comes to mind is Baidu's health unit, which they shut down, whereas all the other big players like JD Health, AliHealth, and Tencent, which also has a health unit (though not separately listed), are still in the game. The same goes for Qunar, which was merged with Ctrip, and iQIYI, which is also not performing well (although, to be fair, long videos in China generally don't do well, and Tencent Video is struggling too). Similarly, Baidu Maps, which was dominant (but disliked, at least in my personal experience when talking to people, so take that with a grain of salt), has now been overtaken by Gaode, the Alibaba map. Today, they are focusing on self-driving cars and AI. In self-driving cars, they were among the first movers, but now more companies and collaborations are emerging, like Xiaomi and Huawei, and it's not clear to me if Baidu is still leading. The same is true for AI - their chatbot is the best, but honestly, the others aren't even trying. I've talked to people at PDD, and they say they will wait and see. Tencent mentioned in one of their calls that AI doesn't mean chatbots, so they are focusing on applications, not a Chinese ChatGPT. Anyway, these are just my random thoughts, as I said, I'm not a Baidu expert.
Oh, I just came across this. It's in Chinese but worth reading. It discusses why focusing on profitability rather than developing large language models (LLMs) for their own sake makes sense in China.
https://mp.weixin.qq.com/s/IXjlplabhMcEqAVPZyq9kg
BIDU was the earliest of BAT (Baidu, Alibaba & Tencent) to list in the US in 2005, and thus seen as the leader - it also held the highest market cap.
Apart from its flagship search engine, it also had multiple other star products such as its Tieba (a discussion forum), Encyclopedia, NetDisk, etc.
Unfortunately, it failed to monetize those appropriately, and was overly reliant on its core search engine business, which used an outdated auction-based model - advertisers would bid to be placed higher in search results. This meant that users often had to scroll past a whole page of advertising before arriving at relevant results.
Worse, this model was ill-suited to sectors such as health, in which there was (and still is) drastic asymmetry in information. Baidu's vetting and moderation process was found to be severely lacking, and it was hit by multiple PR crises.
The most well-known among those was the Wei Zexi case in 2016, in which Wei, a young cancer patient, underwent expensive & unproven treatments from an ill-reputed private provider that was masquerading as a public hospital. In China, public hospitals generally have the best reputation whereas private providers are often suspect. The treatment proved to be ineffective and he died.
Baidu tried to clean the search results up, but similar problems cropped up again and again, for example, in the sale of the Baidu Hemophilia subforum - in which patients and their families would share information on treatment and providers - to an unlicensed private healthcare provider. The latter used the subforum to market its services and also delete negative comments.
So that's why Baidu doesn't have a healthcare team any more: its internal processes and practices were simply unable to keep up. Similar issues challenged many of its businesses in which it was the prime contender, but lost touch with users due to mismanagement.