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Chinese Private Hospitals Boycotts Baidu

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Published on : Apr 07, 2015

Amid the ongoing conflict of private hospitals pertaining with regards to advertising, Baidu Inc. the Chinese operator revenue fell to the lowest in three weeks. The depository receipts for America dropped by 2.4 per cent to US$203.60, as recorded in New York. This by far is the lowest closing price registered by Baidu Inc since March 17. The trading volume was recorded at 4.1 million shares, which again was 1.4 times the daily average over the last three months. 

The plummeting stock prices can be attributed to the news reported in China Business News about private hospitals withdrawing their advertisements on Baidu effective from April 5. The decision to stop advertising on Baidu came after medical institutions cracked down on what is mentioned as falsely implicated healthcare information especially in ads which are posted on site. The report also mentions ad requests of a total of 7,800 hospitals affiliated to Chamber of Commerce Putian Healthcare Industry were rejected. Putian Healthcare Industry apparently was the group that had previously agreed to boycott advertising on Baidu. 

The healthcare group members, together account for 15 per cent of the total search revenue generated by Baidu. During the boycott, the company lost 1 per cent sales each day, as reported by 86Research Ltd. Juan Lin, who is an eminent analyst from Shanghai, speaking on the topic of Baidu and healthcare community conflict mentioned, the suspension may continue for several weeks and the private hospitals in China will probably lower their overall ad expenditure following the aftermath of the incident. 

Stifel Nicolaus & Co. is reported to have slashed its sales for Baidu since the second quarter by almost 3 per cent. A team of analysts led by George Askew wrote a research report on the same reiterating the hold ratings.