After a costly attempt to try and crack the Chinese market, Uber sold its Chinese operations to the country’s dominant ride hailing company – Didi Chuxing, in a $35bn deal in August 2016.
Uber was unable to compete with Didi, which claimed to have almost 90 percent of the market in China.
Similarly, Airbnb faces stiff competition from domestic companies which currently own a larger share of the market; Tujia.com has more than 400,000 listings on its website compared to Airbnb’s approximate 100,000.
Airbnb’s strategy to grow in the market has involved significant investment; including quadrupling the size of the engineering team it has in Beijing.
Additionally, the company has changed its name to Aibiying — which means welcome each other with love — to make the name easier to pronounce for Mandarin speakers.
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But the name has reportedly been negatively received and isn’t actually easy to say for Mandarin speakers.
It appears Airbnb may face similar struggles as Uber while trying to grow in the Chinese market which differs in many ways from the likes of the US and Europe, where these companies are so dominant.
However, the size of the home-sharing market is still relatively small in China and there is a significant opportunity for growth.
Tujia may have over four times the number of listings as Airbnb, but there is room for both companies to grow considerably.
GlobalData estimates than in 2016, domestic trips in China totalled 2.3bn, while international arrivals reached 59m.
Just nine percent of Chinese people said they were unlikely to book peer-to-peer accommodation on their annual holiday, while 55 percent said were likely to, according to a recent GlobalData survey.
This shows that there is an appetite for Airbnb’s services in China but the supply of listings is currently small and therefore has the potential for significant growth.
The size of the domestic tourism market in relation to international visitors makes it vital for Airbnb to cater for Chinese travellers if they are to succeed in the market.
Failure to understand what domestic travellers are looking for will mean losing out to local rivals who are more familiar with these preferences.
For example, Beijing has multiple business districts, many with a speciality such as technology or commerce; Tujia users can sort listings based on these needs, while those travelling for medical purposes can select areas close to hospitals.
The amount of information on Tujia’s site may seem excessive to Western users, but it is important for Chinese travellers.
There are some early signs indicating Airbnb could crack the market, having recorded high growth over the summer.
Compared to the same season last year, the company recorded growth of 495 percent, 388 percent and 371 percent in the cities of Hangzhou, Chongqing and Wuhan, respectively.
But, for long-term growth and if the company hopes to become the largest home-sharing platform in China, it must try to understand Chinese travellers specific needs and the idiosyncrasies of each location.