China search war hots up as Google muscles in

Chinese search firm Baidu is facing tough competition as Google moves in

China's leading search engine, Baidu, sometimes described as 'China's Google', reported its latest financial results today.  

The company generated revenue of just under $40m in 2005. Baidu's unaudited total revenues for the fourth quarter of 2005 were $14.2m, 29 per cent up from the previous quarter, and an increase of 168 per cent year-on-year.

The news comes only a day after Google opened its new Chinese HQ. 

"We achieved robust earnings growth while making significant investments in search technology, products, network capacity, sales and distribution, and most importantly, in people," said Robin Li, Baidu's chairman and chief executive, in a statement.

While showing a steady increase, Baidu's income still pales in comparison to Google's global revenues of over $6bn.

To date, Baidu's main source of income has been from companies which pay to have their websites placed at the top of search results. It dubs this service 'Pay-for-Performance'. The paid results are not marked as different from other search results.

"Continued traffic growth, customer base expansion and the scalability inherent in our pay-for-performance business model contributed to strong financial results for the quarter," added Baidu chief financial officer Shawn Wang.