It seems not very intuitive that Focus Media (FMCN), a LCD media advertising company, has done better than Baidu (BIDU), the No. 1 search engine in China. After all , putting up the LCD screen, soliciting the advertising customers, and creating those short films are not high tech as “search engine”, which involves creating a large number of clustered computer, and complicated search algorithm. But this is the reality, Focus Media (FMCN), closed above $80 today amid the new offering of $500 m, the PE (ttm) is about 76, market capital 4.4 B. Since its debut in July 2005 (at 20s), it’s up about 300%.

How about Baidu (BIDU), it debuted on August 2005 at about $120, and it closed at $124.50 today. Here is the chart. The PE is about 165 and market capital 4.2 B.

Of course you will say BIDU is overpriced at its debut and thus we did not see much movement afterwards. But a deeper reason behind this, is that Focus Media is the advertisement king of China (at least for now and near future), Baidu is not. In China people who have the spending power, so called white collars workers (especially managers) don’t have much time to spend online; there are not too much E-commerce due to infrustructure and other issues. They will see those LCD screens in the office buildings and subway everyday. And they do buy the goods and services promoted on the LCD advertisement. On the other hand, Internet is more for younger generation in China (kids). They play game online, listen to music online, but they don’t click on the Ad. from baidu.

That’s my explaination of the disparity of two companies. I think this may change but it will take some time if it does.