BEIJING, China — China's dominant Internet search engine Baidu Inc said on Tuesday it would invest 20 billion yuan ($3.22 billion) over the next three years on online-to-offline services, including group-buying service Nuomi.

"Right now Baidu has over fifty billion (yuan) in cash on its books," said CEO Robin Li in a press release. "We're going to take 20 billion of that and do Nuomi right."

Baidu, China's third-biggest Internet company, has been vying with larger rivals - e-commerce titan Alibaba Group Holding Ltd and social networking firm Tencent Holdings Ltd - in booming online-to-offline (O2O) services, which have traced the growth of smartphone use.

Such services let users connect with nearby, everyday activities such as calling taxis, finding deals at local restaurants and booking cinema tickets through their smartphones.

But Baidu is seen by analysts and industry observers as lagging its competition. In private-ride hailing services it has invested in U.S. company Uber Technologies Inc, which in China is bumping up against the dominant player, taxi-calling app Didi Kuaidi, backed by Alibaba and Tencent.

Baidu also said it would launch a "Membership Plus" strategy for the group-buying service, akin to Groupon Inc, letting merchants using Nuomi build their own marketing platforms to "increase user retention rates and consumption frequency".

Baidu last week priced a public offering of $1.25 billion in notes.

By Paul Carsten; editors: Miral Fahmy, Edmund Klamann.