Baidu Inc Signs Deal With LightInTheBox

LightInTheBox Holding Co Ltd-ADR (NYSE:LITB) announced Tuesday that it has entered a strategic partnership with Baidu Dianxin, a fully-owned subsidiary of Baidu Inc (ADR) (NASDAQ:BIDU). LightInTheBox shares rallied more than 9% after the announcement while Baidu went up 1%. The deal will help the companies expand in global mobile markets.

Baidu Dianxin owns some very popular Android apps

Baidu Dianxin creates apps for Android devices. It is known for its power saving app DU Battery Saver, Baidu Mobile Security and DU Speed Booster. Its apps have clocked over 350 million downloads in China and 200 million outside China. LightInTheBox is an online retailer, selling gadgets, apparel, garden products and small accessories.

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The deal will allow LightInTheBox to market its products and apps to international consumers through Baidu’s search engine. It is expected to provide a broader audience to the retailer. In return, the agreement will allow the Internet giant to monetize its apps, indicating that LightInTheBox will pay to advertise on Baidu’s apps. Given the popularity of Baidu Dianxin’s apps, there is a huge potential market for the Chinese online retailer.

Is Baidu’s deal aimed at challenging Alibaba?

Baidu Dianxin CEO Zhang Lei described the deal as “very mutually beneficiary.” The deal will help Baidu compete better with Alibaba Group Holding Ltd (NYSE:BABA). Earlier this month, Alibaba signed a deal with Costco Wholesale Corporation (NASDAQ:COST) to sell Costco products through its Tmall platform. Alibaba has also launched a mobile search engine called Shenma in collaboration with UCWeb to challenge Baidu’s leadership.

However, China Stock Research notes that the deal with LightInTheBox isn’t aimed at taking on Alibaba. If the Chinese search engine giant were making such a bold move against Alibaba, it wouldn’t have preferred to enter a strategic partnership through its subsidiary. Further, LightInTheBox generates most of its revenues from Europe, not from China. LigthInTheBox is scheduled to release its Q3 results on Nov.19.

Baidu shares were down 0.13% to $250.02 in pre-market trading Wednesday.