Baidu Inc (ADR) (NASDAQ:BIDU) has announced it will launch a third party settlement service for fund companies and investors after it received a license for fund, sales, payment and settlement. China’s biggest search engine company will have to tackle ferocious competition in this sector.

Baidu

Tough competition ahead

Leading companies like Alibaba’s online payment arm Alipay and Tencent’s similar service Tenpay are amongst the 13 companies who have already received a license as of February 2014, according to data from China’s Securities Regulatory Commission. Alipay is in partnership with 37 domestic funds companies and Tencent’s Tenpay has partnerships with 23 firms.

Earlier in March, Sina Corp, an Internet Company based in Beijing, received a license and plans to unveil a third party settlement platform “Weicaifu” in partnership with Shanghai-based China Universal Asset management and a fund management site fund 123.cn.

Expanding user base

After receiving the required license, Baidu Inc (ADR) (NASDAQ:BIDU) could expand its user base for online management products and provide personalized value-added services, according to analysts. The company already has its own online monetary fund products such as Baifa and Baizhuan in collaboration with China Asset Management Co and Harvest Fund. Baidu’s products will compete directly with Alibaba’s popular Yu’ebao app that was launched in June 2013.

“With its huge user base and dominant market share in online search category, Baidu has strong competitive ability in the online fund sales market,” said Guan Qingyou, vice director of Minsheng Securities’ research institute.

Fund partners for Baidu Inc (ADR) (NASDAQ:BIDU) include names such as Huawei Securities, Guangfa Securities, Harvest Fund and Fullgoal Fund.

Baidu searching for a unique product

Baidu Inc (ADR) (NASDAQ:BIDU) is working hard to design new products that could help it gain ground in the mobile era, contributing even more than the search engine, said Robin Li, the company’s chief executive officer, a few days back.

Li did not provide many details on the new products under development, but said that the company has spent more than 4 billion yuan ($650 mil) on research and development. He added that major portion of the fund will be used to develop products which will be important for mobile like the search engine is vital to personal computer.