China's Largest Search Engine Concedes E-Commerce Space

On March 31, China's largest search engine, Baidu, said it would shutter its E-Commerce shop. A Baidu official said the closing of the site, called Youa, "should not be seen as Baidu withdrawing from the E-Commerce scene," but it's awfully hard to interpret the move as anything else. The official said that Baidu was working on "a new E-Commerce platform product which will suit users better," said a Reuters story. But that doesn't change the fact that China's consumers won't be able to make purchases from Baidu for an unspecified—and quite likely lengthy—time.

Instead of shaking up China's E-tail environment, this move is actually more likely to cement it. The chief rival to Youa had been Taobao, the E-Commerce site from Alibaba, which already had a better than 70 percent online marketshare. Youa officials asked its customers to move to Rakuten China, which is a joint venture with Baidu and Rakuten (Japan's largest E-tailer). From the U.S. retail perspective, this consolidation might make the half-billion Chinese E-Commerce consumers more open to global alternatives. Then again, as Google has discovered, China's government can create some serious hurdles if it wants to.