Airbnb Finding Its Space In China
By Sammy Montana / Copy-Edited by Annie Ly
For any foreign company taking on the Chinese market, the journey is rife with complications and challenges. The same is true of short-term private space rental marketplace, Airbnb, which has in the past year stepped up its operations to crack the China market. Following years of success in both the US and Europe, does the US established company have what it takes to overcome the challenges that come with attempting to expand into the Middle Kingdom? We take a look at its strategy to success, its competitors and whether Airbnb can truly find its space in China.
Building the Airbnb Brand
Airbnb is a start-up founded in San Francisco in 2008. The premise of the company was to facilitate homeowners who wanted to rent their homes to visitors and travellers. In the course of almost a decade, Airbnb has formed an ecosystem of start-up companies providing auxiliary hospitality services needed by guests such as cleaning services, unique dining experiences and transportation, across the world to propel the company to a greater height of success. These start-ups too have blossomed and have been pivotal in redesigning and streamlining the services of Airbnb to make it more professional and reliable in the industry.
The ecosystem of start-ups and services building around Airbnb has enabled the company to grow rapidly and seek to expand its services into other territories embracing internationalisation. The company sought international growth by targeting foreign markets in some of the biggest cities in Europe and South America. It experienced a lot of success and in 2015 it sought to penetrate Chinese and Asian markets.
As the next logical market to expand into, China holds great potential. With more than 700 million internet users and according to the World Tourism Organisation, over 109 million trips taken by Chinese tourists in 2015 alone, the two factors combine the two core tenets which have accelerated the success of Airbnb as a brand. With the growing global trend of digital amongst the ambitious millennial generation aligning with Airbnb's millennial targeted aesthetic and ease of use online, China appears to be the perfect breeding ground for further success.
Localisation Is Key
In several experiments conducted to establish the right business model to crack the Chinese market, it was clear that the company needed to create a localised platform which would the enable it to establish its operations and also be in a position to meet its demands. As with any foreign company entering the China market, there is a need to understand the various needs and behaviours of Chinese tourists and travellers on a provincial or even city basis. A one size fits all approach simply does not work but the question is, could the model of success from the US or Europe be replicated in China?
A localised understanding was vital to enable Airbnb increase its presence in China and also to be in a position to serve its clients in a more personal manner by creating amazing experiences which resonated with the culture and heritage of the Chinese people. Unlike Western tourists, Chinese and Asian tourists prioritise trust and service when it comes to travel. But when the Airbnb model works by giving control to homeowners who merely wish to rent space, the company must offer something different in order to counter these shortcomings.
In a recent brand relaunch and an app makeover, Airbnb pushed a new global campaign emphasising the message: "Live there". According to their brand research, it is no longer enough to be a 'tourist' when you travel. Airbnb understand that modern travellers seek "authentic experiences" which allow them to "live like a local". Is it time for Chinese tourists to embrace this change in traveller mentality too?
Know Your Neighbours
Airbnb still face further challenges from local Chinese companies which have been operating in China in the sharing economy for a while, offering accommodation-sharing services for tourists using a similar model. Local companies have already established huge databases of their listed properties whilst Airbnb have struggled to break ground with listings. They have a wide market presence across China which is evident by the fact that they operate in several destinations across the country.
One rival, Xiaozhu.com has a great presence in the country. Established in China in 2012, the company already has a notable presence in more than 200 cities across the nation. Tujia is another great competitor having experienced success when it secured over $1 billion for financing the expansion of its operations. Tujia now operates in more than 250 cities across China.
Tujia clearly knows its market and has built up a business model that links the most popular online travel search destinations such as Ctrip to give further confidence and ease to user experience. Further, Tujia invest a great deal of time into carefully selecting the properties allowed to list on their platform to ensure they fulfil the needs of their target audience who seek high quality and almost standardised vacation homes to cater to the family-centric needs of Chinese tastes.
As yet, Airbnb is yet to find its niche within the broader market of Chinese tourists. The US based company must decide where to channel its energies and resources to make a dent in relatively new concept of the sharing economy in China. But the fight isn't over yet. As modern trends continue to empower Chinese tourists to explore further afield, Airbnb still have the core building blocks to take on the market.
