How to Interpret Melissa Ma's Return to Baidu?
Yicai Global
/SOURCE : Yicai
How to Interpret Melissa Ma's Return to Baidu?

(Yicai Global) Jan. 23 -- Baidu Inc. [NASDAQ:BIDU] has been making headlines in early 2017. Just as Microsoft's former executive vice president Lu Qi joining Baidu as president and chief operating officer has surprised many, Robin Li's wife Melissa Ma's return to the company has also triggered heated debate within the industry.

People have interpreted Melissa Ma's return differently, while Ma herself has said that a sense of mission and a crisis were the main factors for her comeback. "As a special assistant to the chairman, I hope that my judgment, communication skills, ability to effectively execute decisions and hard work will help the company to implement its strategy in a timely and comprehensive manner," Ma said.

Ma pointed out that she hopes to serve as a bridge between Robin Li and Baidu's staff and to become Baidu staff's "sister."

A sense of responsibility and a sense of mission are the driving force behind the move.

But there is another aspect to Melissa Ma's return. Caijing magazine noted Robin Li publicly said that he would delegate some authority to Lu Qi and, to honor his promises, give him necessary time and space. But the biggest risk is that the asymmetric relationship between Li, Ma and Lu will make it difficult for Lu to work effectively.

Li and Ma are likely to support one another. In her self-introduction, Ma stated that she is Li's companion of 21 years and has been his business partner for 16 years, and Baidu is one of the most important parts of her life.

Ma gave Li a lot of support in the early days of Baidu. She has always been a special presence at Baidu, and is also an important shareholder.

As Baidu's 2015 annual report reveals, Li held 5.59 million or 16.1 percent of shares and Ma held 1.57 million Class B common shares—accounting for 15.5 percent and 4.68 percent of voting rights, respectively. Informed sources claim Ma has been playing an important role behind the scenes.

The fundamental reason for Ma's return is that Baidu suffered many difficulties in 2016. "Everyone still clearly remembered that Baidu boasted the highest market value among Chinese internet companies. But what happened over the last four and a half years? There is so much that we need to reflect on," Ma commented.

Very capable, eloquent and bold are phrases that people familiar with Baidu use to describe Ma. A former executive of Baidu told 'touchweb,' a WeChat public account, that the most important thing now is to help Baidu get better.

The fact that Baidu was continuously hacked last year served as a form of "detoxification" for the company.

The most urgent task for Baidu is to reverse the company's year-on-year revenue decline and its deficit of "bright spots."

"A company must grow. Without growth, there will be no cohesion among its staff and a variety of conflicts could erupt. Then the founder or CEO will regard his/her subordinates as incompetent, while the subordinates will believe that the founder or CEO's strategy is ineffective," said an industry insider regarding the state of affairs at Baidu.

The company will then enter into a vicious cycle, and mutual trust can erode.

The source believes, "Compared to other companies, Baidu is not without merit. Baidu's negative factors have basically been exposed in recent years, and the company's market value is near bottom now—it's a bit like Microsoft a few years ago. Now Baidu is in need of some imaginative initiatives."

For now, the introduction of Lu Qi is a very positive move, indicating that Robin Li has recognized his own weakness. In the past few years, Baidu has largely been left behind its competitors, two other internet giants, Alibaba and Tencent. The latest appointments show that Li is willing to take responsibility, and will allow another capable person to become Baidu's CEO in the future.

Ma's return may play a role of bridging the divide between the business leaders and Lu Qi, as well as the conflicts between "locals" and "returnees." As Robin Li's wife and Baidu's founder, Melissa may be able to convince Baidu's staff.

In addition, Robin Li has trust in his wife. Ma's return may actually diminish the mistrust between Li and the professional managers. This may also be a very important step forward.

The above source noted that Baidu has relied on revenues too much in the past, and it was hacked continuously in 2016, but that helped bring about a positive action—that is, it played a part in the "detoxification" of Baidu.

"Baidu brings together many outstanding people and maintains a good cash cow," an industry source pointed out. As long as Baidu finds its direction and develops talent like Zhang Xiaolong and Zhang Yiming, there will be results, and stock prices may rebound sharply.

Touchweb, founded by senior media specialist Lei Jianping, mainly reports on internet trends and hot topics.

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