Baidu, owner of the most popular search engine in China, is considering acquisitions to extend its lead in the world's largest market for internet users, chief financial officer Jennifer Li said.

"People approach us and we get to look at a lot of things," Li said. "Internet is at an early stage of its development. It's dynamic, and we need to stay ahead."

The company is stepping up efforts in electronic commerce and mobile-internet services in China, which has more than 300 million web users. Baidu aims to widen its lead over Google in the country by boosting online searches for wireless phones, and its electronic-commerce business could develop into a rival for Alibaba Group Holdings.

"If they now start thinking about making acquisitions, it makes very good sense," said Eric Wen, an analyst at Mainfirst Securities Hong Kong. The company is likely to buy web businesses outside of the search market and may seek additional investments in Japan, where it started operations last year, Wen said.

Baidu faces rising competition in its main business, with Google forging a partnership with the country's biggest wireless-phone company, China Mobile. Alibaba's Taobao site is also encroaching on the market.

Taobao, Alibaba's consumer trading site, offers an ad channel for small businesses in China, potentially forcing advertisers to choose between Baidu and Taobao, a Morgan Stanley report noted.

There is "huge potential" to increase customers at Baidu, which had about 300,000 advertisers as of last year, Li said. The company will focus on offering internet search services to the 40 million small and medium-sized businesses in China, said Li.

Baidu accounted for 62.2 per cent of China's paid-search market last year, an increase from 59.3 per cent in 2007, research firm Analysys International said. Google's market share grew at a faster pace, to 27.8 per cent from 23.4 per cent, the Beijing-based company said.

- BLOOMBERG