Airbnb Seeks to Expand in China With Local Help


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Brian Chesky, the chief executive of Airbnb, which has begun a push to expand its operations in China and increase its use by Chinese travelers..

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Chester Higgins Jr./The New York Times

HONG KONG — For large Internet companies in the United States, the prevailing wisdom has long been that China is off limits.

Beijing’s concerns about being unable to control foreign sites, combined with regulations that require companies to censor and monitor users, has led many start-ups to heed the experience of forebears like Twitter and Facebook and refrain from opening a local China site.

But that may be changing.

With its announcement on Tuesday that it was expanding in China, Airbnb joined a growing list of large American Internet companies that have begun experimenting with new models to enter the Chinese market. With more than 600 million Internet users, China is a rich prize.

In a statement on its blog, Airbnb said outbound bookings from Chinese tourists had risen 700 percent during the past year, making it the company’s fastest-growing market of customers booking stays outside their home country. Airbnb, a start-up based in San Francisco, allows people to offer their homes for rent; it completed a fundraising round in June of more than $1 billion.

Airbnb offered few details of how it would meet that Chinese demand. But the company said it wanted to “create a truly localized platform” while being “prudent” in establishing operations within China. To help, the company said it would work with the Chinese venture capital firms China Broadband Capital and Sequoia China, the local affiliate of the American firm, to increase its presence in the country.

The first move for the venture capital firms will be to help recruit a chief executive for Airbnb’s operations in China before expanding the local team.

The strategy closely resembles one taken by the professional social network LinkedIn, which worked with the same two venture capital firms when it introduced a local site in early 2014. LinkedIn also hired a separate chief executive for its China operations.

LinkedIn’s strategy was to have its partners help the company work with the Chinese government. In particular, China Broadband Capital is politically well connected. Founded by Edward Tian, an entrepreneur who once ran a telecommunications company with the son of the former Chinese president Jiang Zemin, China Broadband has assisted other American businesses, like Evernote, in entering China.

In an interview last year, a company spokesman said China Broadband saw its role in the LinkedIn deal as helping the American company communicate with the government.

Although it is unclear what demands Airbnb might face, proposed Chinese laws dictate the company must store Chinese customer data inside China. That could mean giving the government access to data not just about the domestic travels of Chinese, but also about where they stay abroad.

But cracking the Chinese market must happen first. Brian Chesky, the chief executive and a co-founder of Airbnb, wrote in the blog post that Chinese tourists have been the top spenders internationally since 2012. Expanding inside China will allow the company to make money on their domestic travels as well.

To do so, Airbnb will run up against a local analogue, Tujia, which is already valued at more than $1 billion and offers access to hundreds of thousands of properties across China. Like Airbnb, Tujia helps people market homes to tourists for short-term stays, but it also provides an array of other services around the rental, like cleaning and managing properties.

It is unclear whether Airbnb will take up similar services to persuade Chinese to open their doors to visitors. They have an experienced adviser in the industry in the form of Sequoia China’s founder, Neil Shen, who is known in China for starting the Chinese travel site Ctrip.com.

In his blog post, Mr. Chesky said Mr. Shen “has deep experience in the Chinese Internet and hospitality sectors.”

Even as LinkedIn and Uber have led the way for Airbnb, neither has managed to avoid causing a stir. Some LinkedIn users complained online that the company had failed to communicate how and why it was censoring content for users in China. It also briefly censored posts in Hong Kong, which enjoys freedom from Beijing’s content restrictions.

And several Uber offices have been raided in recent months by local Chinese police and regulators who say the company’s service is illegal. Uber drivers and taxi drivers alike have protested in different cities. Uber is also working to ensure that more of the data from its China operations are stored within the country, according to a person with direct knowledge of the matter.

All three companies are likely aware of the potential political fallout that could come if they change their minds. Google, which once acceded to China’s demands to censor content, noisily reversed course in 2010, delivering uncensored results to Chinese users from servers in Hong Kong.

That soured the company’s relationship with the Chinese authorities, and Google products are blocked in China.



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