China Watch Blog

China Watch Blog has learnt that Baidu Inc, the most popular search engine in China, introduced a service on Wednesday that will make it easier for customers to access content they have searched for on mobile devices.

The China Daily reported that the step is intended to fend off competition from rivals such as Tencent Holdings Ltd.

The mobile “box computing” service, as Baidu calls it, takes users directly to games, e-books, music or other content they have searched for instead of showing a list of Web pages containing links to that content. With it, Baidu is trying to bring a variety of Internet services to its basic search engine.

“Giving users better searching experiences with ‘box computing’ will help us gain more market share,” said Yue Guofeng, general manager at Baidu’s mobile Internet division.

Baidu is using the service to stay ahead of competitors such as Tencent Inc and the US-listed Qihoo 360 Technology Co, analysts said.

Tencent, which owns the instant-messaging service QQ – one of the most popular applications in China – has been working with software developers to add various Internet offerings to its main product. Qihoo has adopted a similar approach.

“The three companies all have a large number of users, and by providing diversified services on their own platforms, they can monetize their large user bases,” said Fang Li, an analyst with the domestic research company Analysys International. She added that although Baidu provides search services, Tencent instant messaging, and Qihoo security, the companies compete with each other as Internet sites that offer diversified Internet services.

Baidu said earlier this month that it will invest $306 million in Qunar.com, a Chinese online travel website. Yue said the step is intended to add to the number of Internet services offered by Baidu.

Tencent has also poured billions of yuan into investments this year. The money has gone into e-commerce, online travel, movies and other products and services.

China Watch Blog has learnt that China rising prices around the country have not only been hitting consumers, but also small businesses.

Small businesses

According to a China Daily report, a decline in freight orders, which started in mid-May, has caused a number of problems for Zhang Yan, the owner of a delivery company .

Zhang owns 30 vans that mainly transport goods manufactured in Baigou town, Hebei province, a major production center for the luggage industry, 102 kilometers south of Beijing. The decline in orders convinced Zhang that a downturn in business was inevitable as bag makers were facing a contraction.

“Two of my clients shut down their businesses last month and some of the others have reduced production because of squeezed profit margins,” said Zhang.

Baigou is famous in North China for producing leather bags and suitcases. The town, with a population of about 120,000, has more than 3,000 factories and workshops that churn out 65 million bags annually.

Factory in Baigou

The rapid rise in labor costs and the soaring price of raw materials, together with the increasing cost of borrowing, has left small and medium-sized businesses (SMEs) across the country facing a dilemma.

In June, inflation in China showed no signs of abating. The consumer price index, the main gauge of inflation, rose to 5.5 percent in May, and when the figures for June are released in the middle of next month, they’re expected to confirm another increase.

Moreover, the Producer Price Index, which reflects changes in the prices of raw materials and other costs, came in at 6.8 percent in May, down from 7.3 percent in March, but still much higher than in September, when it was 4.3 percent.

Meanwhile, the authorities have cracked down on lending and the money supply to combat inflation, a move that has further increased the pressure on China’s capital-thirsty small businesses. To make ends meet, some businesses have even been forced to use underground financing sources, which charge exorbitant interest rates. Moreover, wages have been rising continually in recent years, adding to corporate costs.

Along the main street of Baigou where many small workshops are situated, a number of the factory gates have been closed for some time.