Baidu and China Life Find Common Ground
Baidu contributes $200 million to the fund
Baidu (BIDU) and China Life Insurance Group have created a $1.0 billion (or 7.0 billion yuan) investment fund called the Baidu Fund Partnership. China Life will contribute about $800 million to the fund, while Baidu will contribute $200 million.
In creating this fund, Baidu and China Life have demonstrated that their technology investment interests align. Baidu is China’s (MCHI) top Internet search company, earning it the nickname of “Google of China.” Since Baidu depends on Internet advertising for the majority of its revenues, it counts Alibaba (BABA), JD.com (JD), and Tencent (TCEHY) among its Chinese rivals.
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The Baidu-China Life fund aims to invest in Internet startups that have a special focus on the Chinese technology market. The Internet sectors that the fund is eyeing include mobile Internet, financial technology (or fintech), and artificial intelligence (or AI). Baidu is already active in the AI scene, working on AI-related initiatives such as autonomous driving systems.
According to Grand View Research, AI will generate $35.9 billion in direct revenue and $59 billion in enabled revenue by 2025. AI’s direct revenue and enabled revenue were $641.9 million and $6.0 billion in 2016, respectively. The chart above illustrates the AI’s projected revenues.
Considering the revenue potential in the AI industry, it is understandable why Baidu and China Life are pooling resources to invest in this market.
China fintech favorable for major brands
Fintech is another promising technology industry. In China, fintech revenue opportunities are expected to accrue to major brands as the government tightens control of the industry to weed out unscrupulous players. Thus, Baidu can be seen positioning itself to take advantage of the revenue opportunity in this market.