Airbnb China head leaves company, as Tujia keeps expanding

Many startups’ pitches tend to go along the lines of becoming “the Airbnb of X,” but all Airbnb itself wants to achieve is to become the Airbnb of China.

While the company has been successful in other markets, the company—much like Uber—continues to struggle in the Chinese market despite high ambitions and a big budget. Tujia, Airbnb’s closest rival in China, recently secured another win: an additional $300 million in funding. Meanwhile, Airbnb’s China head, Ge Hong is departing after just six months with the company.

Ge was the successor of no one; Despite substantial investments in the Chinese market, Airbnb had failed to fill the position for the first two years of operation in China before eventually promoting Ge from inside the company. This time around, Airbnb has appointed Nathan Blecharczyk as the company’s China head—at least ensuring that the position doesn’t once again become unfilled for an extended period.

In an email sent to employees obtained by Bloomberg, Ge praised Airbnb China’s achievements during his tenure, which included growing its Beijing offices from 30 to 120 employees, as well as doubling the number of China listings on its service compared to one year earlier. According to the email, Ge’s team also managed to reduce fraud from a staggering 8 percent of gross bookings to less than 2 percent. It remains unclear why Ge decided to depart the company, but according to an email sent by Airbnb CEO Brian Chesky, Ge “is stepping down to pursue opportunities outside of Airbnb.”

As Jing Travel previously reported, Airbnb decided to double down on the China-market earlier this year, announcing a new brand name, 爱彼迎 (“Aibiying,”) plans to grow its China operations, as well as intensified localization efforts intended to make Airbnb more Chinese.

Controversially, part of the “becoming more Chinese” has included complying with Chinese laws on giving local authorities access to user information, as well as canceling bookings in Beijing leading up to the Communist Party Congress this month.

Tujia's ambitions beyond China

Seven months later, Airbnb may have achieved the goal of growing its China offices, but it has also suffered a backlash over its new Chinese name, lost its China head, and seen local rival Tujia start gobbling up the competition and securing new investments from high-profile companies—led by Chinese OTA juggernaut Ctrip. Unfortunately for Airbnb, Tujia isn’t satisfied with a dominant position in China but wants to expand to destinations visited by global Chinese travelers. Most recently, Tujia partnered with Japanese e-commerce giant Rakuten to make significant inroads in the Japanese home-rental market.

Just how ambitious is Tujia? Tomoko Suzuki, CEO of Tujia Japan told reporters that it aims to account for 50 percent of the Chinese home-sharing market in Japan.

For Airbnb, a fast-growing Ctrip-backed competitor in China is a severe threat to its competitiveness in the Chinese market. However, Airbnb’s dominant global position—most importantly, the number of international listings on its service—still makes for a strong value proposition to Chinese travelers who visit international destinations.

Now that it’s clear that Tujia isn’t satisfied with only becoming the dominant player in Chinese domestic travel, Airbnb’s big trouble in little China is quickly becoming a big problem in East Asia. As Chinese travelers are becoming the dominant group of travelers in the region, they’re also becoming the region’s kingmakers.

While Airbnb’s most recent $31 billion valuation far outstrips Tujia’s $1.5 billion, continued leadership problems and missteps in China are putting the company under a lot of pressure. The job ahead for Airbnb’s China head is already more difficult than it was when departing Ge took on the job in April.