Facing stiff competition, Airbnb could repeat defeat of Uber in China

Updated 2016-12-29 10:58:40 Global Times

The home-sharing app Airbnb has taken a stronger foothold in China, establishing a new subsidiary - Airbnb China - just two months ago. But the recent unhappy experience of an Airbnb host has put the company and the rest of the industry under the spotlight in the country. Analysts said a more effective credit system for both hosts and guests is needed before the industry can expand around the country. Airbnb also faces strong competition from domestic rivals, and it could possibly repeat the defeat of Uber in China, an analyst said.

As home-sharing app Airbnb inches its way into China, one host's recent unhappy encounter has put the company and the home-sharing industry under a spotlight.

On December 21, Airbnb host Wang Moyan complained in an angry microblog post that a college student from Shanghai had ruined her apartment after a stay, during which the student had used the property as a set to shoot videos. Wang said she confronted the student, who then disappeared.

The post got a fair amount of attention online. Some microbloggers said they had similar experiences as Airbnb hosts. As of 6 pm on Wednesday, the post had received 35,774 comments and had been reposted 60,797 times. It also got major play in domestic media.

In a statement sent to the Global Times on Tuesday, Airbnb China said that it is currently investigating the matter and promised that it will protect the host's interests based on the same standards everywhere. It noted that it has an initiative that entitles hosts on the Chinese mainland to 5 million yuan (9,455) in compensation for such problems.

Although the student apologized on December 22, the issue has stayed a hot topic on social media. The debate focused on a single question: how can home-sharing hosts protect their interests?

Airbnb said it provides a rating system for both hosts and guests and it also requires both to submit personal identification information to use its service. The problem is, analysts said, that China doesn't have a robust credit system like more developed countries, which can cause problems for home-sharing platforms.

A well-designed rating system and insurance guarantees could help reduce such unhappy incidents, said Chen Chi, CEO of the domestic home-sharing website xiaozhu.com. But those measures aside, "a society-wide credit system would be more helpful," Chen told the Global Times on Monday.

Here to stay

China's sharing economy has grown rapidly over the past few years. For instance, car-hailing app Didi Chuxing, founded in 2012, has grown into a unicorn valued around .8 billion, according to US market consultancy CB Insights.

At present, there is also a boom in bike-sharing start-ups. Venture capital firms have sniffed out the opportunity. For example, bike-sharing app Mobike just announced 0 million of round C financing in September. In October, its competitor ofo announced 0 million of round C financing.

Home sharing, which offers travelers an alternative to hotels, is also developing rapidly amid a tourism boom. The size of the market is expected to top 30 billion yuan (.3 billion) in 2016, up from 10 billion yuan in 2015, according to a research report in July by Internet consultancy Sootoo.

It's no wonder that Airbnb wants to cement its position in the growing market. On October 27, the company announced the establishment of Airbnb China. On December 7, it began to store Chinese user data on domestic servers to comply with government regulations.

It has also teamed up with China's two major Internet firms, Alibaba Group Holding's Alipay and Tencent Inc's WeChat, to make its service more convenient for its Chinese users.

To cultivate an Airbnb community, the company has also partnered with the local governments of cities like Shanghai, Southwest China's Chong-

qing and Hangzhou, capital of East China's Zhejiang Province.

A 'curse'

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