How is China Web market different to US?
I segued then into the China Web market in general, in comparison to the US market. Keith said the biggest challenge in China is that although costs are low, revenues are even lower. So this makes it difficult to make money in China. He says if you look at Baidu’s revenues compared to Google’s, “it’s a tiny, tiny fraction”. He notes that Baidu trades at a much higher revenue multiple than Google. So he says China is “an early investment opportunity, with very large valuations compared to the revenues”. Keith thinks that driving up revenue will be China’s major challenge in the Web market over the next 5-10 years. But he says due to low costs, you can afford to make those investments (in China) now and wait. I asked Keith what are the approaches of the big US Internet companies in China. He said they’re all active, but they each take very different approaches. It comes down to how fast they localize. He says Yahoo is probably the most localized of the big companies, due to their JV part
