A CFO With Many Jobs-and Challenges: Baidu’s Jennifer Li Talks About China’s Booming Internet Industry

A CFO With Many Jobs—and Challenges

Baidu’s Jennifer Li Talks About China’s Booming Internet Industry

PAUL MOZUR

March 9, 2014 7:47 p.m. ET

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‘You depend on [employees] to think for themselves and take action.’ Bloomberg News

BEIJING— Jennifer Li is the No. 2 executive at the company often called the Google of China—and by extension the most powerful woman in the booming Chinese Internet industry.

Ms. Li, who joined Baidu Inc. BIDU -1.41%in 2008, wears a number of hats in addition to her formal role as chief financial officer. She heads the company’s marketing, corporate-development and human-resources efforts and helps with its mergers-and-acquisitions strategy. (The company’s chairman and chief executive,Robin Li, is no relation.)

Despite Baidu’s dominance in China—it has more than three-quarters of the country’s market share by revenue—it faces growing challenges. Two other massive Chinese Internet companies, Alibaba Group Holding Ltd. and Tencent Holdings Ltd., are vying to capture a new generation of Chinese who access the Internet primarily through smartphones and gadgets. Complicating the picture, the mobile market in China is diffuse, with a profusion of apps and app stores all battling for users and revenue.

To adjust to the challenge, Baidu has focused efforts on developing products for smartphones, like its search and map applications, and has also gone on a buying spree, capped by a $1.9 billion acquisition of 91 Wireless Websoft Ltd. Last month, Baidu said it did not expect profits to grow in 2014, despite rising revenue, because of heavy spending to continue to improve its appeal to smartphone users.

Ms. Li spoke to The Wall Street Journal about the mounting challenge as well as juggling her own responsibilities. Here are edited excerpts of the talk.

A Sweeping Role

WSJ: You are an unconventional CFO in that in addition to finance you handle many different jobs. How has that influenced your role as CFO?

MS. LI: When I first joined Baidu, it was similar to a lot of startups—you were supposed to play many different roles. From day to day, I switch issues quite drastically. Finance is one expertise. Human resources is a different language. Marketing and PR is very different, and so is M&A. But all these things connect and help me make better judgments. They make me a better CFO.

Having a perspective on the operational side, you know what your company does well and what it wants. Then you face a decision of whether you build what it wants or buy it. A lot of M&A is buying teams. Having the human-resources oversight gives you an idea of human talent—what we have, what talents are out there and what are some of the teams you can invest in.

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WSJ: Previously, Chinese Internet companies would compete with each other by creating similar services. Over the past year, they have instead started buying up companies to add services. What’s driving that?

MS. LI: You have to manage tremendous growth. There are a lot of internal issues that management needs to pay attention to and that management attention isn’t there to digest.

Chinese Internet companies have all grown from being small, where they didn’t have a lot of resources. But through years of development, established players are emerging that have accumulated know-how, as well as financial resources. As the industry dynamics shift, one of the strengths for an established player is they have the financial resources to deploy to speed up the process. The other element is that it’s a very competitive industry. You compete to establish yourself as you look to the future. Companies don’t want to miss out. If you don’t put yourself in that position, you’re missing a huge opportunity.

The Challenges of Tech

WSJ: How is your role as a CFO at a tech company different from being in a more traditional industry?

MS. LI: The Internet is changing quickly and has fast growth. For a traditional industry, there is an established pattern, so there’s a lot of focus on operational matters. It’s mostly efficiency, budgeting, a lot of cycles. For me, though, every day is different.

In a traditional industry, you can communicate five years down the road. For us, we give one quarter of guidance. Google doesn’t even do that. It’s impossible to predict five years down the road. That ambiguity is very exciting.

WSJ: Last year, Alibaba and Tencent heads Jack Ma and Pony Ma said they feared they were growing too old and losing touch with the new Internet usage patterns of young people. How do you keep up?

MS. LI: It depends on your people, the insights and perspectives you get from all your employees. Tech companies should be bottom up. You can’t see everything, and you depend on talent to see things, to think for themselves and take action. We have a very young company. The average age is 26. A lot of young people come up with products that would be to the liking of their generation. For us, it’s constantly a learning process, learning to speak young people’s language, engaging with them. It’s a part of the job that’s good, having a young heart.

WSJ: What impact do you feel the government has on the tech industry in China?

MS. LI: I think overall the country and the government are very supportive of Internet companies’ progression. The communications industry is run by the government. It’s state-owned. But we also see established players that can replace in a big way, or substitute for, the telecom-service providers. We see video sites, like our iQiyi, that serve video content that used to be hugely regulated.

There’s information going out on [Sina Corp.’s] Weibo social-media platform. A lot of the media platforms used to be centrally controlled. All of these things have really blossomed over the years. As long as you improve social progress and create value for the average Chinese person, you flourish. So I think standing where I am, I’m very confident we will continue to do constructive things for society.

Mr. Mozur is a staff reporter for The Wall Street Journal in Beijing. He can be reached atpaul.mozur@wsj.com

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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