5 Ways Airbnb Could Breach the Great Wall
A tough market for American companies, but not impossible
PHOTO CREDIT: Getty Images
In late March, Airbnb announced a rebrand of its fledgling effort to establish a foothold in China.
Rechristened Aibiying and introducing the company's Trips feature - which offers people experiences led by local guides - Airbnb is hoping to accelerate past its well established in-country competition. As I've said before - based on my experience launching MySpace in China (and 29 other countries) - it's not an easy country for an American company to win in.
Alibaba killed eBay, Baidu demolished Google, and Tencent QQ dispatched MySpace - and those are just a few of the good guys who tried but couldn't quite get it right. That said, if anyone has the opportunity to do well in China, Airbnb might have a reasonable shot if they play their cards right.
Airbnb is clearly working hard to integrate with the Chinese cultural and business landscape
Airbnb has checked some good boxes: in addition to rebranding with a Chinese name, there's a WeChat login, they accept both AliPay and WePay, and Chinese users have 24/7 access to support entirely in Mandarin. All of these are positive examples that signal the company's awareness of what it takes to compete for Chinese business. As others have noted, Airbnb also astutely concluded a separate Chinese spinoff would be wise as would sharing data on the business with Chinese officials.
Lesson for others: Understand the operational environment and work effectively within it.
They are David to Tujia's Goliath
Sure, Tujia is the dominant player in this space - backed by both Expedia, CTrip and others in the venture capital and travel industries. They have 400,000 properties to Airbnb's 80,000. CTrip is distributing their bookings so it's a huge boost that allows Tujia to reach a huge boost without spending too much on marketing. That's supply, name recognition and reach, valuable commodities in any market but in China in particular.
That said, in the showdown between David and Goliath, it wasn't the big guy that ultimately triumphed. As a smaller player, Airbnb can win if it differentiates in such a way that lures Chinese travelers with some intriguing new offer or quality: exclusivity, a niche set of desirable properties, amazing brand awareness from the States, the Trips feature that offers bookable experiences led by locals, and places recommended by the same. It's important to note that in this context, a win would really be taking some good portion of market share from CTrip.
Lesson for others: Play to your strengths - trying to be something you're not is inevitably a losing proposition.
They might try focusing on a valuable subset of underserved consumers.
If Airbnb launches Trips correctly, the company has a big opportunity to take a chunk of a very lucrative customers set: Chinese millennials. But that will mean a big PR and marketing push to build awareness of what Trips is and does. And it will also mean really emphasizing service because these customers want to be taken care of - that's the expectation here (and Tujia has deliberately built its reputation around it).
Lesson for others: Look for the gaps, the opportunities to effectively insert yourself.
Airbnb might also win with the international customer set.
Forget the inbound, in-country Chinese traveler. It would also be a clever strategy for Airbnb to target the 13.5M people who visit China every year (who don't originate from Macau, Hong Kong and Taiwan). The company's current brand recognition is stronger abroad than it is in country - so these visitors may have higher levels of trust and comfort with Airbnb than they might with Tujia. Focusing on these inbound international travelers as well as Chinese millennials might give Airbnb a decent foothold in a tough but highly compelling market.
Lesson for others: Seek ways to leverage what's working for you elsewhere.
Airbnb is killing it internationally
There's a massive outbound Chinese traveler market - 133 million people a year - so that might be another avenue for Airbnb, which has a presence in 65,000 cities and has more than 3 million listings. The company would have to overcome some challenges, however, to effectively hook this particular market segment. For Chinese travelers who don't speak English, the notion of staying on some private property - in a place where people don't speak Chinese or English - may be quite an intimidating prospect. To effectively leverage its global reach as the advantage it certainly is, Airbnb might identify ways to make it easier for travelers to bridge that gap. If they can help these travelers feel safe and confident to book - for example, by facilitating communication with hosts - that might go a long way to attracting new customers.
Lesson for others: When confronted with an obstacle for customers, solve their problems for them.
Can Airbnb make it in China? It's certainly an uphill battle against a powerful, known quantity. But they're a great company to root for that's doing some smart things - and they have the opportunity to go further with at least two lucrative constituencies.
As the phrase goes, that ain't nothing.