Google: We're Going to Crush Baidu in China. We Think.

Google (GOOG) is the undisputed champ of search just about everywhere in the world except Russia and China (anywhere else? Please let us know). In the latter, Google has surged ahead of Yahoo China and other competitors but is still getting clobbered by Baidu (BIDU), which has also been a NASDAQ moonrocket.

But getting its head handed to it in China hasn't thwarted Google's ambitions there. On the contrary, according to the WSJ, Eric Schmidt said last year that Google would be the China market leader within five years. At a conference in Boao, China, this week, the president of Google China, Kai-Fu Lee, appeared to agree with Eric--sort of.

"Certainly, we would like to aspire to be a market leader in five years," Mr. Lee said Monday on the sidelines of the Boao Forum for Asia.

Google accounted for 26% of China's Internet-search revenue in the fourth quarter, up from 17% a year earlier, according to Beijing research firm Analysys International. Market leader Baidu.com's share of the market rose to 60% from 58%.

Many Internet users in China are more familiar with Baidu, which started earlier in the country and which attracts users in significant part by facilitating easy access to free music.

"Gaining share against a well-established, supermajority competitor is a difficult proposition because there is a certain critical mass, economy of scale and word-of-mouth effect that one has to overcome," Mr. Lee said.

Google certainly would know. Still, Google's market share gains against Baidu are impressive: In the US, since Google entered the market, no one has ever gained that much share against it. In fact, since Google entered the market, almost every other player has lost share, every quarter, for years. So perhaps Eric's not hallucinating, But it would seem to be Baidu's game to lose.

The WSJ adds:

Google also is exploring investments in Chinese companies that focus on social networking and mobile Internet as part of its strategy to expand in China, a burgeoning market that analysts estimate may already exceed the U.S. in the number of Internet users.

In China, Google has invested in Tianya.cn, a social-networking Web site, and in Xunlei Network Technology Co., a provider of video and game downloads, for undisclosed amounts.