BBaidu Inc (BIDU.O) bought control of Brazilian online-discount company Peixe Urbano for an undisclosed sum, the latest step in a push to expand in Latin America’s largest economy that began more than two years ago.

Under terms of the transaction Baidu will let Peixe Urbano’s management team, led by co-founder and chief executive officer Julio Vasconcellos, operate autonomously within Baidu’s corporate structure.  Both firms declined to give the size of Baidu’s stake in Peixe Urbano.  The Chinese company started operations in Brazil in November although in July 2012 it introduced a Portuguese-language version of its Hao123 link-list website.

Baidu CEO Robin Li, who accompanied Chinese President Xi Jinping on a visit to Brazil in July, pledged during the visit that the company would spend 120 million reais ($50 million) in Brazil over the next three years.   Shares of Baidu fell 1.2 percent to $214.69 in early afternoon trading on the Nasdaq.  Perhaps the market did not buy the story completely.

The purchase of Peixe Urbano’s controlling stake will help Baidu expand in a country where the e-commerce market is expected to grow an average 18 percent annually by 2016, according to several consulting firms including E-bit and A.T. Kearney.  Rio de Janeiro-based Peixe Urbano has more than 20 million customers in Brazil, with more than 30,000 companies as merchant partners.

Peixe Urbano is the local equivalent of Groupon in Brazil and the largest group buying site there. Baidu’s acquisition will grant the Chinese internet giant both a bigger share in the Brazilian internet market and the first move into the e-commerce business, which could potentially generate additional revenues.

Baidu is actively investing in rival technology firms to upgrade its services and grow market share in segments such as e-commerce and mobile social network companies.  The company expects that the entirety of its product and service portfolio will be used by half the world’s population by 2019.

Background:  Baidu entered the South America market by launching a local Portuguese language search engine named Baidu Busca coupled with its social service PostBar.  Brazil is the fifth largest internet market in the world and the largest market in South America, with 107 million internet users and 53% internet penetration that is expected to grow to 59.5% in 2017.  Last month, Baidu opened its local development office in Sao Paulo, Brazil, which became the seventh international development center and its local head office in South America. As with the Jakarta office, the Sao Paulo center will also be used to develop long-term relationships with the business community, government, and internet users, which will strengthen the Baidu brand in Brazil. The Brazilian site is currently a success for Baidu with more than 50 million people accessing Baidu’s services every day.

Source:  Reuters and AmigoBulls