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Did you know that Airbnb is one of the few Western websites that isn't prohibited in China? Other Internet behemoths like Google, Facebook, Instagram, and Dropbox are less fortunate, as they cannot get past China's stringent internet censorship, known as the Great Firewall.

Let's examine how the well-known rental marketplace debuted in China in 2015 and has progressed since then. 

Key challenges in Airbnb’s market entry in China

China, one of the biggest rising economies in the world, draws brands with its enormous market and promise of quick revenue growth. However, Airbnb faced difficulties when it entered the market, like these: 

• Fierce competition: In China, Airbnb had to contend with domestic platforms like tujia.com and xiaozhu.com, which were already well-established in the local market. In contrast, in other markets, Airbnb was viewed as a game-changing invention with no competition.
• Stringent rules: A foreign company like Airbnb faced additional challenges due to China's strict rules, which included internet filtering and government-imposed barriers to entry.
• Distinct customer behavior: Compared to Western users, Chinese consumers have unique online behaviors that include how they search, use websites, and pay for services. For instance, Chinese consumers primarily rely on platforms like WeChat and Alipay for transactions, whereas Western consumers frequently use credit cards for online payments. 

How Airbnb went the extra mile to customize every step of the Chinese consumer’s journey

In 2019, Tao Peng, the president of Airbnb China, revealed that the secret to their approach was localization. It affected every aspect of their market debut, including marketing and product design.

There are 3 key aspects to their success. 

Crafting a local User Experience

Airbnb modified the platform specifically for the Chinese market after realizing that Chinese users have different expectations for online experiences than Western users.  To see how localization strategies can vary for other markets, particularly in adapting to Asian user expectations, check out this article on localizing European mobile games and apps for the Asian market.

Airbnb China’s Homepage in 2016

However, they continued beyond design. Airbnb collaborated with regional businesses like Tencent to incorporate WeChat into the app because it recognized that user behavior and buying patterns vary in China. After localizing payment capabilities, users found it simple to share listings, log in, and make payments using WeChat Pay. Airbnb has also added Alipay as an additional payment method. 

Culturally-aligned marketing 

A new name was the first step in Airbnb's marketing plan in China. In China, they changed their name to "Aibiying" (爱彼迎), which translates to "welcome each other with love." The significance of connection and hospitality, which are fundamental to Chinese culture, was reflected in the choice of this name.

According to Airbnb's advertising campaigns, the Chinese platform is "built by Chinese engineers for Chinese people. " The company also highlighted Chinese influencers and tourists in its marketing. 

Airbnb China’s “Lost and found” Campaign

Compliance with local regulations 

In China, short-term rentals are subject to stringent regulations, and data privacy is also carefully enforced. Airbnb collaborated extensively with Chinese authorities to comply, which included keeping user data in the nation as mandated by law.

Airbnb also mandates that Chinese property hosts register their houses with local authorities to comply with regulatory requirements and minimize potential conflicts. 

Pivoting quickly: Turning away from domestic travel listings post-pandemic

When Airbnb first entered the Chinese market, it successfully localized for Chinese customers to grow the business. However, Airbnb decided to close its domestic Chinese property listings in China on July 30, 2022, after operating there for six years, starting in 2016. Several issues influenced the decision to shut this down

• China was one of the nations most negatively affected by the COVID-19 outbreak. Long-term lockdowns and stringent isolation policies caused a sharp drop in demand and income for Airbnb properties in China, which had a bigger effect than in many other pandemic-affected nations.
• LLocal competitors like Tujia and Xiaozhu were supported by significant digital giants like Alibaba, Meituan, and Ctrip, which posed a serious threat to Airbnb. In the end, Airbnb had approximately  8.7% of the market.
• The laws governing short-term rentals in China were intricate and subject to frequent changes. In September 2021, local authorities mandated that hosts obtain and provide six distinct certificates, such as police-signed security guarantees and proof of residence. 

Faced with all this pressure, Airbnb decided to concentrate only on outbound travel activities from its Beijing headquarters. 

This allowed the company to focus more on the growing part of the business: the foreign adventures of local Chinese travelers.   

Takeaways

Did a subpar localization approach drive Airbnb to abandon part of its business there? Not at all. For seven years, their localization initiatives gained significant traction in both the market for domestic properties for Chinese travelers and foreign properties for Chinese travelers and were executed with great skill. But there are two critical lessons to be learned from the platform's story:

• Localization is critical, but there's more to it. It's one thing to enter the market; the next step is maintaining your position and increasing your market share. Government laws, local competition, and the once-in-a-century epidemic that shuts down your entire business are just a few factors that affect your long-term performance.  
• Be ready to adjust. You will likely eventually need to modify your market approach. What initially works in the new market may eventually lose its effectiveness due to a dizzying number of factors. As your company expands internationally, it's common to modify your business plan. Yet despite shuttering one side of its business in China, Alibaba's localization function is still developing and growing its revenue.  

A local product and message are the foundation of a local experience. From designing integrated localization processes to conducting linguistic testing on your localized product, we develop comprehensive localization solutions for multinational brands. Contact us to find out how we can help you with your international growth.