Enter a search term such as “mobile analytics” or browse our content using the filters above.
That’s not only a poor Scrabble score but we also couldn’t find any results matching
Check your spelling or try broadening your search.
Sorry about this, there is a problem with our search at the moment.
Please try again later.
Airbnb is apparently 'doubling down' on China by relaunching the company with a new Chinese brand name (ài bi yíng) and increasing headcount in the country.
Reaction to the new name has been mixed, however, and many are already comparing the company's strategy with other brands who previously failed in China. So, is Airbnb going to struggle too?
The story of a Western brand making a big announcement about launching in China and then withdrawing after a couple of years of disappointing results is on the verge of becoming a cliché.
Recent examples of this tale of woe abound:
- ASOS: Which blew £10m trying to launch its own Chinese ecommerce site in 2014 and finally withdrew in April 2016.
- Delivery Hero: Which pulled out of China last year as well due to immense competition, laying off 400 staff in the country.
- Uber: Whose truce with Didi Chuxing in August essentially ended its adventures in China.
Hope, however, springs eternal and with its recent $1bn funding, Airbnb's executives are almost certainly on the hook to conquer the world, including China.
Will Airbnb succeed where others have failed? Or will the firm join the long list of other Western brands that failed to tame the red dragon? It's tough to say, but from a marketing perspective, it's not looking good for a few reasons.
1. The company blew it on the name
Airbnb went through a intense branding exercise in China. According to AdAge, Airbnb spent a year deciding on a Chinese character name for the company and, in that time, brand consultancy Labbrand tested over 1,000 possibilities with consumers.
Yet the name they came up with for the China Airbnb brand (ài bi yíng) has been widely panned in the press and on social media:
- "Sounds like a filthy love hotel"
- The brand "might as well stick to having no Chinese name"
Others complained that the name is hard to say and it is remarkably similar to Microsoft's Bing search engine (bì yìng) which, apparently, is a term associated with illness.
This is not a good start for Airbnb in the country. According to Branding News, "a good, and wisely-chosen Chinese name starts to attract consumers, but if not selected properly, the brand name may push away clients."
One company which seems to have figured this out is Mercedes-Benz. The closest approximation of the company name in Chinese is bensi which sounds like 'rush to your death'. Because of this the company changed its Chinese brand name to a distincly different term ben chi, which translates to 'dashing speed'. In 2016, Mercedes-Benz celebrated the sixth successive year of growth.
Best Buy, the American electronics firm, sadly did not do the same. Its Chinese name, Baisimai, translated to "think it over 100 times before buying" which is, perhaps, the opposite of the message that the company wanted to convey. Best Buy shuttered its Chinese operations after just a few years in the country.
2. Airbnb is up against well-established incumbents
Unsurprisingly, businesses which help consumers rent spare rooms on the internet already exist in China – in droves.
Local firms Tujia, Xiaozhu, and Zhubaijia are all known as the "Airbnb of China" and each have hundred of thousands of rooms available for booking already, compared to Airbnb's 75,000. And, because the companies are homegrown they are more likely to understand local tastes, housing standards, and how to build customer trust in the country.
That said, Airbnb is initially targeting outbound Chinese travelers in order to play on its strengths. None of these three local companies has much business outside of China where Airbnb dominates.
This is a wise choice, as one commentator notes, but another local competitor, Ctrip, is already a significant player in the outbound China travel market. To illustrate this point, Ctrip recently purchased UK-based Skyscanner to further its international growth.
This is not to say that Airbnb should avoid any market with competition, but it should consider the 'dead bodies' of other Western companies in front of them and understand that its stellar reputation in the West may not be sufficient to win China.
3. Airbnb has not yet partnered with Baidu, Alibaba, or Tencent (aka BAT)
Possibly the most significant obstacle that Airbnb must overcome is that it has not yet partnered with one of the three big internet players in China: Baidu, Alibaba, or Tencent (collectively known as BAT).
It's difficult to overstate the importance of BAT in China. The total 2016 revenues of the three companies is estimated at $33bn and their combined market cap exceeds $500bn.
Also, Chinese netizens spend more that 60% of their mobile time using a service offered by BAT. This is largely because these three companies 'own' the high-frequency life services: group purchase, movie tickets, taxi hailing, and food delivery.
With stats like this behind them, partnering with one of the BATs is essential for any Western brand to break into China.
Interestingly none of the big three have yet invested in any of the clones and so Airbnb may be able to fill the homesharing niche for one or more of them.
Regardless of whether they do, though, Airbnb should seriously consider about how it is going to fit into the existing Chinese digital landscape before making too many more announcements about breaking into China.
So will we soon be reading about Airbnb's massive losses in China and its decision to focus on 'more profitable, non-Chinese markets' in a few years' time?
It's not clear one way or the other, but Airbnb does face a number of challenges in the country. While the name controversy may well disappear in time, the existing competition and the uncertainty about BAT's stance on the firm are two major issues which need to be resolved.
So while the funeral announcement may be premature, it is also a bit too soon for Airbnb to trumpet its arrival in China with much fanfare.