Markets

Baidu and Amazon.com Team Up in China Tablet Challenge

Source: Amazon.com.

Still, its efforts will probably take many years to fully bear fruit. In entering the market, Amazon is taking on powerful domestic incumbents, akin to a smaller upstart trying to disrupt Amazon in the United States. However, Amazon has proved time and again that its competitive drive and willingness to think long-term shouldn't be overlooked. The potential rewards appear worth the effort. Researcher Kantar predicts that by 2020, China's e-commerce ecosystem will cater to 891 million users and produce total sales of roughly $2.2 trillion at today's exchange rates. That's too massive an opportunity for Amazon to watch develop from the sidelines.

Baidu, meanwhile, should benefit from this alliance with Amazon, but probably to a lesser degree. I see this as more of a defensive move on Baidu's part. Baidu dominates the Chinese search market allows Baidu to routinely turn out sizable profits. Furthermore, with tantalizing long-term growth prospects, Baidu remains one of the most obvious long-term tech investments anywhere. However, its competition doesn't operate in a vacuum, and Baidu has seen several new challengers in search in recent years from the likes of Qihoo360 and Sohu.com 's Sogou search engines.

Credible research on the state of the Chinese search-engine and services market is scarce, but what research we have tends to support the notion that Baidu's market position remains largely unchanged. By adding Amazon as a new partner, Baidu appears to have further solidified its position. So while both Amazon and Baidu stand to gain from this recent deal, I think Amazon investors have more to celebrate by pushing deeper into one of the most massive growth markets in all of tech.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Baidu and Amazon.com Team Up in China Tablet Challenge originally appeared on Fool.com.

Andrew Tonner owns shares of Baidu. The Motley Fool owns shares of and recommends Amazon.com and Baidu. The Motley Fool recommends Sohu.com. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BIDU SOHU AMZN JD

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More