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Quote:Today, Baidu has a market value of $3 billion and operates the fourth-most trafficked Web site in the world. And Baidu is doing what no other Internet company has been able to do: clobbering Google and Yahoo in its home market.

While Baidu continues to gain market share in China--and does so with a Web site that the Chinese government heavily censors and that gives priority to advertising rather than relevant search results--some analysts question whether Baidu can withstand competition from Google and Yahoo, which possess superior technology and global work forces.

But Baidu's evolution, and Li's journey as an entrepreneur, offer textbook examples of the payoffs and perils of doing business in China and suggest that Baidu may prove to be far more resilient than some analysts believe. China has a population of 1.3 billion, about 130 million of whom are Internet users, an online market second in size only to the American market. Because China is the world's fastest-growing major economy, analysts consider it the next great Internet battleground, with Baidu uniquely positioned to prosper from that competition...