CKGSB Assistant Professor of Marketing Li Yang is quoted by both Bloomberg and Forbes discussing how China’s top search engine operator has been affected by a recent scandal.
Baidu is being investigated by the Chinese government after student Wei Zexi, a Shaanxi native, died in April from a rare form of tissue cancer called synovial sarcoma. Wei sought out a controversial treatment advertised among search results on the search portal, but the procedure failed and the 21-year-old penned an online post blaming Baidu before his death, triggering public outrage over the company’s advertising practices.
A recent Forbes article reported that, following a massive drop in Baidu’s share price on May 4th, China’s largest search engine operator may have little choice but to rein in one of its most lucrative sources of revenue after the death of the student triggered national criticism. The article cites CKGSB Assistant Professor of Marketing Li Yang saying:
“Ads that appear on the search engine are currently not subject to China’s existing advertising laws. The long-term damage Baidu has to grapple with is the tremendous impact on the company’s brand, as people will be less inclined to use its desktop and mobile search engines or trust its search results after the Wei Zexi incident.”
“This seriously damages the brand and I don’t think Baidu is doing well in terms of PR protection because they didn’t respond in a fast and proper way. Even if people change topics in a few days, this negative image of Baidu’s brand will still persist in many people’s minds.”
Wei’s death has drawn unprecedented attention from both the public and the regulators. The scrutiny comes at a critical time for Baidu, which is hunting for new sources of profit as consumers move away from desktop computers where it dominates in China. Any move that harms its business could also reduce its ability to invest in technologies like self-driving cars and on-demand services.
To read the original Forbes article, please click here.
To read the original Bloomberg News article, please click here.