At first, Google provided an automatic redirect to its Hong Kong site from Google.cn. Google later restored Google.cn's landing page, providing only search services whose results it doesn't have to censor, such as music and product searches, and offering a link to its Hong Kong site. In July, the Chinese government renewed Google's license to operate in the country.

Li also dismissed suggestions that Baidu holds a "favorite son" status with the Chinese government. "That's a misperception," he said, arguing that the competitive landscape in the search engine market in China is more vibrant and crowded than in the U.S. "We're not the only game in town."

However, Baidu is the market leader, used by 99 percent of the country's Internet users, according to Li. Revenue and profit are growing at a healthy rate and Baidu now has a market capitalization of around US$40 billion.

At different points several years ago, Yahoo, Microsoft and Google tried to buy Baidu for anywhere between $1 billion and $2 billion, but Li was able to convince his investors that they would reap higher returns if the company remained independent. "I knew Baidu had much larger potential," he said.

When he decided to move back to his native country to found Baidu, Li worked in the U.S. as an engineer at InfoSeek, and had developed a search technology that received a U.S. patent.