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Baidu releases indexes spanning labour to Apple's China sales

Thursday, July 21, 2016 - 12:48
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Baidu Inc released its first indexes tracking the state of China's economy and consumers, indicating a rise in unemployment and predicting a drop in sales for Apple Inc.

[HONG KONG] Baidu Inc released its first indexes tracking the state of China's economy and consumers, indicating a rise in unemployment and predicting a drop in sales for Apple Inc.

Based on mapping query data from China's biggest search engine, the indicators employ the positions of users, the 25 billion location requests they seek and the Wi-Fi hotspots they log into across the country. Baidu handles 70 to 80 per cent of all online searches in China and its mapping service boasts 700 million users.

From this month, the Beijing-based company will release employment and consumer indexes, both of which have showed a decline when compared to 2014.

Wu Haishan, a senior data scientist, said Baidu would start selling more granular data next month, which is capable of tracking the performance of specific cities, industries and even brands like Apple. The indicators will be released at the start of each month.

"Such analysis should be very useful for the likes of hedge funds, investors or managers at companies," he said.

"It will be charged based on volume of the data that you are interested in, for example how many cities, how many provinces or how many firms you are interested in."

Investors and analysts have long questioned the methodology of Chinese government-issued statistics, one reason why some economy-watchers turn to indexes compiled by private sources such as e-commerce leader Alibaba Group Holding Ltd and payments network UnionPay.

Baidu's indicator release coincided with the abrupt and unexplained suspension of one such well-watched gauge, an unofficial purchasing managers index compiled with the help of China Minsheng Banking Corp.

In a report demonstrating the potential of the research, Baidu compared the number of people searching its maps for specific Apple stores in mainland China with the tech giant's revenues across greater China, which includes Taiwan and Hong Kong.

Baidu's researchers say they can project Apple's sales in the region, on the assumption that mainland consumers behave in much the same way as in the other two locales.

The 15.4 per cent rise in queries during the last quarter of 2015 compared with a 14 per cent rise in Apple's sales. When searches fell 24.5 per cent in the March quarter, sales for Greater China dropped by 26 per cent.

"Based on our analysis of latest data, we project that the Apple's revenue of second quarter 2016 may be down around 20 per cent on a year-over year basis," it said. 

Apple, which is expected to report its financial results on July 26, declined to comment. The greater China region is the company's largest market outside the US.

Baidu's report cited a similar practice at Foursquare Labs Inc, which used check-in data to accurately predict a 30 per cent decline in same-store sales at Chipotle Mexican Grill Inc following an E coli outbreak.

Mr Wu said Baidu's data could even be used to actively track the number of people actually watching movies in cinemas. This could help fight box-office fraud, as when movie producers buy out shows to boost ticket totals.

Mr Wu said the employment index, generated by searches and data relating to 2,000 industrial areas across China, showed that hi-tech parks grew at a healthy pace while manufacturing centers showed strong declines.

The consumer index using data from 4,000 commercial areas was less positive, showing a 7 per cent decline in June 2016 compared to a year earlier.

While other Chinese Internet giants are creating their own tools using information gathered from customers, he said Baidu had an unbeatable edge thanks to its technology systems and datasets.

"Our technology - the algorithms, the models - are the most advanced and cutting edge," he said.

BLOOMBERG