Mary Meeker’s Internet Trends 2017 study reported that China saw a 24% year-on-year growth in e-commerce in 2016, with 71% of e-commerce spending done via mobile devices.
The study was released as Airbnb named its head in China, taking on a market which operates very differently to those the sharing platform has set up shop in until now.
Airbnb appointed Hong Ge as vice president of its China business, promoting him from his position heading up engineering for Airbnb China
“Hong has unparalleled knowledge of our product and what it needs to be in China, combining a deep technical expertise with an understanding of the local market,” Airbnb said.
The appointment came six months after Airbnb set up shop in China, implementing AliPay for payments, enabling Weibo and WeChat sign-ups and signing partnerships with local travel sites Mafengwo and Qyer.
The company’s key rival in China, Tujia, raised USD300m in investment last year, taking its valuation to over USD1bn. Investors included The Ascott, which has a USD40m joint venture with Tujia to operate serviced apartments in China. The platform has over 410,00 properties listed, in 329 cities in Greater China. At the end of last year the platform was swelled when it acquired Ctrip and Qunar’s homestay businesses.
According to a report commissioned by Homestay in 2015, which looked at renting shared space in a property, against renting a whole home, China’s travellers were twice as likely as those in the UK or US to rent space in a private home. The study found that 18% of the country’s travellers had rented space in the previous year, against 9% in the US and UK.
Mary Meeker’s Internet Trends 2017 study saw the Kleiner Perkins Caufield & Byers analyst signal the growth of e-commerce and the sharing economy in China. Private technology companies are now driving China’s wealth creation, against a decade ago, when health care and consumer staples took the larger share.
Mobile internet usage was outpacing subscriber growth with 30% year-on-year growth. In 2016, there were 700 million mobile internet users in China. Meeker described the volume of mobile payment doubling to over USD5 trillion in 2016, with AliPay and WeChat Pay dominating the market with a total share of 94%.
AliPay’s parent, Alibaba, now outranks Amazon to stand as the world leader in e-commerce, with close to 450 million active users. Its CEO, Jack Ma, met Donald Trump one month before the US president met his Chinese counterpart.
Meeker did not comment on the accommodation area of the sharing economy, but highlighted bike sharing. China is a leader in the on-demand transportation sector with 67% of global market share and, of those who share bikes, two-thirds riding three times or more per week.
WeChat is making its presence felt outside China, as those who would do business in the country find that the corporate culture is very different, particularly in terms of technology. Jilleen Loo, director, International Capital Markets, CBRE Hotels, told us: “In China, unless you have a VPN, there is no Facebook, Instagram, Twitter or Google – it’s blocked by the Great Fire-Wall of China – so this has allowed the home-grown Chinese app – WeChat to be developed and dominate user numbers.
“In terms of features it includes everything you would expect e.g. communication and messaging, digital media and entertainment, e-commerce & retail, Fintech and payment, navigation and location services, and advertising.
“For users outside of China, there are still limitations on some features such as the payment feature, which similar to Applepay, or Paypal links your WeChat account to your bank card. So far, WeChat still does not allow you to link foreign cards outside of China.
“Because all these features are so well integrated, you can use a single app to see your friends posts, check reviews, make hotel bookings, pay for the hotel, chat to friends for other recommendations or use the map features to determine the rest of your itinerary all without leaving the original WeChat app.
“I could not do business or keep in touch with my friends in China without WeChat. Some of my colleagues laugh at me because I am always looking and chatting on my phone and I guess they think I am slacking off – but in actual fact, it’s often the only way I can reach my clients!”
HA Perspective [by Katherine Doggrell]: At Pandox’s Hotel Market Day last year, the company focused on China and Andreas Scriven, then-international managing director & head of consultancy, Christie & Co, told the attendees tales of executives insisting on selfies before meetings. At the post-event gathering, attendees showed me their WeChat accounts and their interactions. Less the toxic-echo-chamber which Twitter stands accused on than a new way to run your entire life.
Tradition has seen businesses approaching new territories as colonisers, bringing their deep-set business beliefs and imposing them. Those global operators who have been successful in China so far are those who have realised, quickly, the need for local partners. Some of these entanglements have coloured the convoluted nature of the sector in Europe – witness AccorHotels’ partnership with Huazhu as it fends off shareholder Jin Jiang.
China has leapfrogged the usual period of maturing and is now dominating technology. The likes of Donald Trump would have the world believe that China is all cheap aluminium, distorting the global markets. The truth is that it is technology where China is set to lead the world, both in terms of delivery and changing the way it does business.