Airbnb picks China head to compete with local rivals, but is it too late?

Move may come too late in the mainland market, which so far does not have any success stories involving foreign internet companies, says analyst

PUBLISHED : Thursday, 01 June, 2017, 9:50pm
UPDATED : Friday, 02 June, 2017, 9:23am

Airbnb has finally appointed its head of mainland business, two years after the US home-sharing giant entered the country, as it moves to ramp up business in a market dominated by domestic rivals.

The company has promoted Ge Hong, formerly the product and engineering head of Airbnb China, to be the global vice-president overseeing business development on the mainland, it said in a statement on Thursday.

“We believe Ge’s expertise and experience will inject strong momentum for Airbnb’s China business,” the company said.

A graduate of Yale University with a masters degree in computer science, Ge joined Airbnb China last year and is now the highest-ranking executive at the company.

Ge, who had previously worked at Facebook and Google, will directly report to Airbnb chief executive Brian Chesky.

Entering the mainland in 2015, Airbnb has seen its business expansion inch forward in the country because local competitors already offer Airbnb-like operations being the first to deliver their services in the country.

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Finding a chief executive at Airbnb China was seen as “the top priority” by the company, as the role was previously shouldered by its chief financial officer Laurence Tosi.

Tosi told Bloomberg in December last year that the company was “moving extremely slowly, carefully and deliberately” as with all the things related to China.

“By finding a dedicated China head, Airbnb is expected to have a team that has 100 per cent focus in growing the business in China,” said Lu Zhenwang, the founder and chief executive at Shanghai-based Wangqing Consulting.

“But whether or not he could pull it off in China is too early to tell. After all, there are very rare cases for foreign internet companies succeeding in China,” Lu added.

The appointment is the latest effort by Airbnb to gear up its expansion in the mainland. In March, it adopted the name “Aibiying”, which translates as “welcome each other with love”, in an unusually high-profile event in Shanghai. The firm pledged to double its investment in the country and triple its local workforce to serve the world’s largest population of travellers.

“There’s a whole new generation of Chinese travellers who want to see the world in a different way,” said Chesky in March in Shanghai, adding Airbnb’s total mainland guests jumped 146 per cent last year from 2015.

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Despite Airbnb's passion, many of its local rivals believe the US company does not sufficiently understand mainland travellers.

“Yes, it is true that more Chinese want to explore solo travel, they want to live in homes rather than hotels, they want to eat local food ... But does it mean that they want to compromise and swallow the inconvenience of being a solo traveller? No,” said Guo Xiao, a vice-president at Beijing-based flat-sharing service Zhubaijia.

Guo’s Zhubaijia is a lodge-rental platform that is dedicated to serving China’s outbound travellers. The company has already raised its game by not only having housekeepers serve customers when they travel abroad, but also train these service providers so they can fold a towel just like those in five-star hotels.