SHANGHAI, Sept 3 — Baidu Inc is investing US$10 million (RM32 million) in IndoorAtlas Ltd to expand mapping services inside buildings and shopping centres as China’s largest Web-search service steps up competition to e-commerce giant Alibaba Group Holding Ltd.

Baidu and IndoorAtlas also signed an exclusive agreement for the Chinese market, the companies said in an e-mailed statement today. The investment values the Finnish company at about US$40 million to US$50 million, a person familiar with the matter said, asking not to be identified as the details aren’t public. Shares of Baidu rose 4.8 per cent in New York.

Billionaire founder Robin Li’s investment comes days after Baidu joined with Dalian Wanda Group and Tencent Holdings Ltd to form an online shopping venture. Li is integrating functions such as search and maps to win more advertising sales by connecting mobile-phone users with locations off line, from coffee shops to movie theatres.

IndoorAtlas is the world’s first to use magnetic anomalies inside buildings to pinpoint indoor locations, with results that are accurate to less than three metres, or about 10 feet, according to its website.

Baidu is holding its annual developers conference in Beijing today, helping spur a rally in its stock on prospects the company may unveil new products.

New products

The Baidu World event “is generally something that’s seen as potentially a catalyst in terms of new products, or new announcements for the company,” Cheng Cheng, an analyst at Pacific Crest Securities LLC., said in a phone interview from Portland, Oregon. “Probably there’s some optimism around that.”

Baidu’s American depositary receipts climbed to US$224.80 yesterday, rallying the most since July 25 when it closed at a record US$226.50. The Bloomberg China-US Equity Index added 0.6 per cent yesterday.

Baidu will release a smart device that can be used in e- commerce at the conference, Sina News reported on its website, citing an unidentified person with the company.

Kaiser Kuo, a spokesman for Baidu, said via e-mail that the company will be giving limited demonstrations of BaiduEye, a smart eyewear product, at the event today.

IndoorAtlas was founded in 2012 as a spinoff from the University of Oulu, Finland. The company was incorporated in the U.S. with an office in Mountain View, California, last year. It also has research and development centres in Oulu and Oxford, England.

Mobile applications

Baidu is investing in mobile applications to capture rising Web traffic on smartphones and tablet computers. The venture with Wanda plans to target that “online-to-offline” segment of directing mobile Web users to nearby shops and restaurants, Wanda Chairman Wang Jianlin said last month.

That’s also an area where Alibaba, China’s biggest e-commerce operator, is seeking to expand its presence. In March, Alibaba agreed to buy a stake in Intime Retail Group Co., owner of department stores and supermarkets, as the company integrates online and offline shopping.

Alibaba in July acquired AutoNavi Holdings Ltd in a deal that valued the company at US$1.5 billion to bolster its Internet mapping tools ahead of an initial public offering.

While Baidu already offers navigation software, it’s of little use inside buildings or shopping centres to locate a specific store or restaurant that users may have found in an online advertisement on their smartphone.

IndoorAtlas raised US$4.5 million in a round of funding led by Mobility Ventures and the Finnish seed fund KoppiCatch, the Wall Street Journal reported in June. The valuation for IndoorAtlas wasn’t disclosed at that time, according to the report. — Bloomberg