Airbnb is getting out of China. This is why
There was a time when China was a lucrative market for Western companies due to its massive population (at the moment: 1.45 billion). Nothing describes the craze for the Chinese market like South Park’s episode 2 from Season 23 Band in China when Randy goes to sell marijuana in China.
It still remains a significant market in some measure. However, Western companies who made it to the country are fast exiting as well. Joining the long list of companies leaving China, like LinkedIn and Yahoo, is Airbnb, the American vacation rental platform.
CNBC reported that Airbnb has decided to cease domestic operations in China. However, Airbnb is expected to continue catering to Chinese tourists planning vacations abroad.
Why Airbnb is leaving China:
- China’s zero-tolerance policy towards Covid-19 and the lockdowns have shrunk the business
- Tough competition with local unicorns like Tujia and other similar businesses
Airbnb in China:
Airbnb first launched in China in 2016. Some 25 million people set up their vacation stays since then using Airbnb. It also had a listing of about 5,00,000 properties. However, China made up of only 1% of Airbnb’s revenue over the past few years.
Airbnb had a hard time breaking into the Chinese market. In 2017, it rebranded itself into Aibiying, to fit in into the market. While Aibiying literal meaning is “welcome each other with love”, it sounded more like a sexual innuendoes in Mandarin.
Airbnb also faced stiff competition from local unicorns like Tujia. In fact, several Chinese unicorns tried to copy Airbnb’s business model but failed; except for one – Tujia. Unlike Airbnb, the Chinese alternative understood the Chinese traveller, who is different from the Western traveller. And based on that, they tailored their services. For example, Tujia offered more service apartment like services, which worked better for Chinese travellers.
Other than the competition, operating costs were reportedly higher in China even before the pandemic began and soared higher after the pandemic for Airbnb. Harsh Covid-19 restrictions mean lack of domestic travel and almost no international tourists to China, dampening Airbnb’s business.
What now: Airbnb will continue its presence in China, focusing on outbound travel. According to Global Times, Airbnb will also have a physical office in China with some hundred employees. It also reported that Tujia will facilitate properties listed with Airbnb to move to their platform.
Airbnb in China had some awe-inspiring properties.
Chenyu Zheng, a blogger on Medium, had compiled a list of some of the best Airbnb properties in China. But it seems like China’s political atmosphere, surveillance, censorship, Covid-19 policies, etc. seem to be dampening foreign business interests.