Google, Baidu eye online videos in China

Industry sources told Reuters this week that the two Internet search leaders have independently had early discussions with some local video Web sites for potential business cooperation or possible acquisitions.

However, neither Internet giant has secured a specific target yet, according to the sources with knowledge of the situation.

The moves come after Google last month closed its $1.65 billion acquisition of top online video-sharing site YouTube. Baidu also launched its own Chinese-language video Web channel on a trial basis a few months ago.

"Google and Baidu have the same idea of expanding their online-video business in China, though they are still studying a variety of business proposals," said an Internet industry source close to the two Web sites in China.

"I think it's a very natural move. Especially for Google; it definitely wants a local version of YouTube, as it already established the Chinese version of the Google Web site," the source said.

The source, who declined to be identified, said Google is considering whether to simply translate its global YouTube site into Chinese or build up a brand-new "YouTube China," possibly through the acquisition of a local video-sharing Web site, which may cost more time and money.

"As a leader in China's rapidly growing Internet sector, we constantly evaluate opportunities to build value for our users and our shareholders," Baidu said in a statement e-mailed to Reuters on Thursday. "We will announce material business developments, if any, when appropriate."

Baidu declined any further comment, while a representative for Google in China was not immediately available for comment.

In the United States, YouTube has enjoyed explosive growth over the past year, and in the process, it pioneered a new grassroots online-video star-making system, as Web viewers seek out short-form comic sketches created by other users.

In China, Viacom's MTV Networks in October agreed to share music videos and shows with Baidu in an attempt to reap advertising revenue in the world's second-largest Internet market, with more than 120 million users.

Baidu has approached a number of Chinese video-sharing sites, including 56.com and Tudou.com, for informal talks, local media reported this week. However, a senior executive at Tudou downplayed the possibility of any potential takeover.

"We don't have any plans to sell our company at present, as we want to it to grow stronger and faster on its own at this stage," said Vicky Wang, a vice president at Tudou.

Wang's desire not to sell out may be common among owners of video-sharing sites, said another industry source, and would be one of the biggest challenges that Baidu and Google would face if they found acquisition targets were limited and expensive in China.

China also has a reputation for strict media censorship--from newspapers to Web sites--another possible challenge to Google and Baidu's business hopes, industry experts said.

The country's Ministry of Culture, for example, said on Tuesday that it must approve all imported network music distributed in the country or Internet services providers may face punishment.