Why Airbnb is well placed to crack the China market | Travel


Airbnb may have stumbled slightly last week when it rolled out its new strategy for conquering the Chinese market – which included a doubling of its investment there and a flashy new name: Aibiying. This is where the problem lies. The name isn’t easy to say for Mandarin speakers, and many Chinese netizens have reacted negatively.

As one Weibo user put it: “Airbnb has given itself a stupid Chinese name, and even shot an MV (music video) for it. It is just like a foreigner trying to speak poor Chinese.” However, despite the name issue, Airbnb may actually be better positioned than other US tech companies that have tried (and failed) to crack China – most notably Uber.

First and foremost, there’s the sheer size – and growth potential – of the Chinese travel market. Tourist spending totalled $500bn in 2015 and is expected to more than double to $1.2tn by 2020, according to a China National Tourism Administration report.

Most of this travel is happening domestically, too. According to the report, the number of trips taken inside China reached a remarkable 4.1bn in 2015, an average annual growth of 10.2%.

The home-sharing market in China is still in its infancy, so, although Airbnb only has 80,000 listings there so far, its domestic competitors are not that far ahead. Xiaozhu, its most direct equivalent, has more than 100,000 listings, while Tujia, which is more of a holiday rental site and oversees the management of its properties, claims to have 450,000 listings.



Shanghai’s Bund area is a popular spot for Airbnb lets

“It doesn’t strike me that anybody’s got this market yet. It looks like an open playing field,” says Jeffrey Towson, a professor of investment at Peking University’s Guanghua School of Management. By comparison, he says, when Uber entered China, its domestic competitors, Didi and Kuaidi, were firmly established. After a costly battle, Uber was forced to bow out.

Airbnb’s other advantage is its global platform. As more young Chinese travel abroad and stay in Airbnb properties, the more likely they are to use it when they go home.

“[Airbnb] should try to dominate outbound Chinese tourism immediately,” Towson says, putting the number of these trips at around 110m a year. “Go after all of them. The Chinese competitors, are they going to start finding listings in Brazil? They can’t do that.”

Agnes Wong, a 23-year-old student from Shanghai, stayed in Airbnb rentals when she studied abroad and now lists an apartment on the platform in a historic building near the Bund, one of Shanghai’s main tourist attractions. Most of her guests are like her: Chinese women in their 20s who have fully embraced the sharing economy.

She prefers Airbnb to its Chinese competitors because it’s a more established brand that she believes is better equipped to protect hosts in case of problems or accidents.

Yang Yifan, a 20-year-old student, is another early adopter. After returning from an exchange programme in Europe, he stayed in Airbnb apartments in Shanghai every weekend for two months. The only obstacle he sees for the company in China is not domestic competition nor cultural barriers, but potentially stricter regulations.

“Though Airbnb has already requested users to register their ID cards, the government may think this is not enough and constrain its development by setting more restrictions,” he said. “If Airbnb wants to develop on a larger scale, it may be faced with further policy obstacles.”



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