Baidu in hot soup?

To supplement our meagre incomes, some Shanghaiist contributors have resorted to peddling strange things over the Internet, everything from pearl necklaces and mahjong bracelets to men's underwear. Given our pathetic (read: almost non-existent) budgets, we decided to take our first tentative steps into the deep dark world of e-commerce and internet advertising with Google Adwords, a product that has pleasantly surprised and amazed us. Not long ago, a sales executive from Baidu called us up (they found us within three weeks of the launch of our website!), asking if we were interested in using their keyword advertising services. For a while, we were seriously considering trying out Baidu because it is after all the leader in the online search market in China, with a 46.5% market share, putting global leader Google a distant second with 26.9%. All that changed when we we came across this story in Business Week's September issue which tells about the "flurry of lawsuits" that Baidu has attracted from online advertisers in China who believe they have been victims of click fraud.

The story goes on to reveal that Baidu has a network of "200 different distributors who in turn farm out the others" to sell keywords for search advertising:

In the U.S., a search engine such as Google deals directly with customers, as would-be advertisers buy keywords online. Not so in China. Even with more than 120 million Chinese people online, e-commerce is still an unfamiliar concept for many Chinese businesspeople. So Baidu and others rely on third-party distributors that employ armies of salespeople to drum up business.

So you see, with an entire system that's basically open to temptation, you have desperate salesmen clicking furiously away in their offices. So this is what E-commerce with Chinese Characteristics is all about. Count us out.

Many a blog and news agency picked up on the Baidu click fraud story back a few months ago, but we have been unable to find any updates. Anyone out there know the status of this?

And, we have to ask -- is this surprising in a country known for everything from fake Pradas and Guccis to fake eggs and even fake milk powder (which killed a few babies!)?

In the meanwhile, we encourage you to buy an ad from us. No fraud -- we promise.

Image from Non-Violent Resistance.