By Ritsuko Ando

NEW YORK (Reuters) - Chinese Internet search leader Baidu.com <BIDU.O> said on Monday it would enter Japan's search market in 2007, prompting a 2 percent rise in its shares, but analysts questioned whether the expansion would succeed.

The company said its decision, which followed a six-month study into Japanese-language search technology, was based on a high level of Internet use in Japan and some similarities between the Chinese and Japanese languages.

Baidu, which claims 60 percent of China's Web search market, did not detail its plans to enter the Japanese market, where competitors will include market leader Yahoo Japan Corp. <4689.T>, Google Inc. <GOOG.O>, and Microsoft Corp.'s MSN



Goldman Sachs analyst Anthony Noto said the Chinese search market was still in its early stages and the company risked losing its leadership position there as it expands abroad.

"If China still represents a significant growth opportunity, why would Baidu want to divert resources and focus to enter the Japanese market, which is clearly bigger, but also much more competitive with several large scale incumbent companies," Noto wrote in a research note.


WR Hambrecht analyst James Lee said Baidu may face difficulty in penetrating the Japanese market.

"It will take some time to perfect the technology. In terms of monetizing the market, they still have a way to go," he said. "We're talking about years."

"Japanese users are more sophisticated, advertisers are more sophisticated, and Yahoo and Google combined have 90 percent of the market already," Lee added.

The battle among Japan's search engineers is increasingly shifting onto mobile phones, as more Japanese consumers access the Web via cell phones instead of from computers.

Google has tied up with KDDI Corp. <9433.T>, the country's No. 2 phone operator, while NTT DoCoMo Inc. <9437.T> offers various search technologies on its mobile phones.

Baidu shares rose 2.9 percent to $114.1, while Yahoo Inc. <YHOO.O> rose 1.9 percent and Google was up 1 percent.

(Additional reporting by Michele Gershberg)

impossible mission
yahoo?
google
msn.............