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Sohu set to build on Google moves

By Chen Limin (China Daily)
Updated: 2010-10-26 09:38

A man walks past a bus displaying an advertisement for major Chinese search engine Sogou.com in Zhengzhou, capital of Henan province.?[Photo/China Daily]?

Chinese online giant talking with Google's ad agents for opportunities

BEIJING - Sohu.com Inc, China's second-largest Web portal, said it aims to grab a 5 percent share of the country's online search sector next year amid Google Inc's reduced presence in the world's largest Internet market.

Nasdaq-listed Sohu said it has also been in talks with some of Google's advertising agents in China for possible business opportunities.

Google said in September that it would terminate contracts with seven of its Chinese advertising retailers by this month.

"While a 10 percent market share will be a bit hard for us, a 5 percent one is an attainable goal," said Wang Xiaochuan, chief technology officer of Sohu.com and chief executive officer of Sogou.com, Sohu's search subsidiary.

Sogou ranked third in China's online search market with a 0.9 percent share last quarter, according to domestic research firm Analysys International. Baidu controlled 73 percent of the market and Google took 21.6 percent of the market.

"The one who benefits most from Google's reduced presence is Baidu, because it's already a very well-established brand while other players are still small," said Sohu Chairman Charles Zhang in a media briefing on Monday.

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"The search landscape will not change in the short term, but Sohu is likely to benefit from Google's exit from the mainland in the longer term."

Zhang's remarks came after the company's search advertising sales reached $5.4 million in the third quarter, a year-on-year increase of 134 percent, said the company in a financial statement on Monday.

Sohu plans to make use of its input method, which is the most popular in China, and browser software to draw more traffic to its search engine. Sogou.com, the third-most-used browser in China, contributed 30 to 40 percent of the company's total search traffic, according to Wang Xiaochuan.

Zhang also said that Sohu will join hands with Chinese e-commerce giant Alibaba Group Holding Ltd, which owns a 10 percent stake in Sogou, to challenge Baidu's market dominance.

Sohu's revenue hit $164.1 million, up 20 percent from the same period last year, while net income increased by 19 percent to $61.3 million, the company said.

Google announced in late September that it would terminate contracts with seven ad resellers in South China, without giving reasons for the move.

The announcement came after the search engine said that it had cut ties with two Chinese ad distributors in July.

Many of the resellers affected have gathered at Google's office in Shanghai in the past few weeks to protest the move.

Zhang from Sohu said earlier that the company hopes to overtake Google to become China's second-largest online search engine.