Baidu — the multi-pronged tech giant which many have called “China’s Google” — is in hot water these days. Their flagship product is the Baidu search engine, but its popularity continues to wane as the country leans further into its mobile-dominant app ecosystem; it’s also notorious for being just plain bad.
Once the proud first initial of China’s BAT tech ecosystem (Baidu, Alibaba, Tencent), Baidu has failed to impress in recent years, and many have started to question whether the spot should instead be given to TikTok-maker Bytedance. The final nail may be arriving in that coffin, now that Baidu’s market value could soon be eclipsed by that of hot pot chain Haidilao.
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Haidilao opened its first restaurant in 1994, eventually growing into an international brand with 935 locations, as well as products in stores around the world. Its biggest claim to fame was exceptional customer service, offering manicures, massages, and video games while customers wait for a table. The unique experience has fueled the chain’s popularity and kept diners flocking.
The chain is valued at roughly $40.9 billion USD, right on the tail of Baidu at $43.5 billion. The close numbers are a bit surprising, as Haidilao’s revenue in 2019 was less than a quarter of Baidu’s.
Like most restaurants, Haidilao suffered during the pandemic, losing 965 million yuan in the first half of 2020. Baidu, meanwhile, achieved growth in the second quarter of 2020, drawing over 5 billion RMB in revenue.
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But Baidu’s founder Li Yanhong feels his company has always been undervalued. For instance, Baidu’s revenue in 2019 was 107.4 billion RMB, compared to Alibaba’s 376.8 billion. Alibaba’s revenue was less than four times more, yet its total market value is nearly 20 times that of Baidu.
Haidilao’s business model has also come under question, with some experts feeling that Haidilao’s business relies too heavily on customer service and public opinion. When the chain tried to raise prices during the pandemic, consumers pushed back until the prices were reverted to normal.
Haidilao may still have battles ahead, but compared to Baidu, it may still have some fight in it.
