What will it take to win in China? Part 3.1

Ramesha Perera
Tue 14 May

The Chinese landscape is littered with the virtual carcasses of startups that attempted to do business in the country and then gave up or were shut out. 

These companies often discover the Chinese market is hard to understand. A few entrenched technology players dominate nearly every business. The government tends to create a regulatory environment that favors domestic companies. And the rules change arbitrarily with little warning. 

In our final analysis of China’s unique startup ecosystem, we investigate Airbnb’s strategy to make it big in the East. 

Airbnb China is one of the four businesses areas Airbnb has prioritised within its global strategy, considering that China has more millennials than the United States has citiens, with many traveling for the first time and open to the new way of booking travel.  

 

 

In fact, Airbnb says, this group accounts for more than 80 per cent of its China market, a higher proportion than in other countries, and their spending power has risen as Airbnb has grown in China.   

Co-founder and chief strategy officer of Airbnb Nathan Blecharczyk said: 

the numbers of Chinese outbound travellers in the country are growing rapidly. China is Airbnb’s fastest growing domestic market ever as well as their second fastest growing outbound travel market ever, he added. 

From July 2018, the number of Airbnb listings in China has grown more than 125 per cent one past year. The growth comes as the company has shifted its focus on quality and removed listings that do not meet their quality standards. 

Home-sharing in China differs from the U.S. and Europe, where travelers are accustomed to a rich bed-and-breakfast culture and many hosts rent out their primary homes while they’re away. In China, hosts don’t want strangers in their own homes. Instead, home sharing has thrived because a national building boom left a glut of empty apartments in the hands of real estate firms and property investors. With homes vacant, local home-sharing companies are tapped to clean, list and manage properties. There’s little to no owner-guest contact.  

Last year, to win over Chinese internal travelers, the company launched a domestically focused operation that it called Aibiying, which translates to “welcome each other with love.”  

The revenue from Airbnb’s China division is expected to climb by more than half, to roughly $130 million this year, which is as much as 4 to 5 percent of the company’s overall revenue, according to The Information.  

But figuring out how to build the Airbnb brand in China has been a challenge – becoming part of customers awareness sets when most people are surfing the web from inside mobile apps like WeChat that don’t have a search function and travel companies can’t buy search ads. 

In an already crowded travel market, Airbnb has attempted to overcome this and differentiate itself from rivals by: 

  • Specilising in high-end accommodations and emphasising quality over quantity 

In March, the company rolled out its premium service, Airbnb Plus, in China. About 100 Chinese social media influencers showed up at a Shanghai restaurant to snap photos, sip cocktails and nosh on pink macaroons emblazoned with Airbnb logos. “Top-line growth is the easiest thing to demonstrate performance, but as we get bigger globally, we have a reputation to protect,” Blecharczyk said. “In China, we chose slow and steady over fast and unsustainable.” 

  • Understanding the behaviour of consumers in China 

Key aspects of Chinese consumer behaviour sets them apart from other nations particularly their higher disposable incomes than people their age in other countries, and an insatiable interest in luxury goods.  

  • Utilising KOLSs to influence consumer behaviour 

One of Airbnb’s key marketing strategies is to feature KOLs (key opinion leaders) in Airbnb advertising campaigns. Recent collaborations include a Chinese New Year ad featuring lifestyle blogger “Thefair2” and an illustration by a popular Chinese cartoonist on social media platform WeChat.   

Seeking out the skills of videographers, photographers, stylists, food bloggers, and DJs  – Airbnb hopes to “organically” influence consumers by sutelly featuring their prodcut or brand in influencers content.   

“We’re trying to portray millennials from China as who they really are, instead of using a global campaign and adapting it to the China market,” says Strategist, Mia Chen.  

 

 

The company is also trying to differentiate itself from rivals from a customer service perspective too, by: 

  • Having a dedicated team to communicate with customers on services, including WeChat and Weibo 
  • Increasing the number of Chinese offices and  
  • Launching “Host Academy,” which offers workshops, live chats on WeChat, and educational videos for hosts. 

 

Next - part 3.2 looks into the slew of homegrown competitors Airbnb face and how the company is navigating through China's political landscape.