Updated: Jan 3, 2020
Written by: Megan McDowell
A Difficult Market to Navigate
In a recent article entitled User research: Airbnb for the Chinese market by Jessie Chen, the author looks at Airbnb’s ability to successfully expand into a complex market such as China. She cites their ability to understand the Chinese market through extensive market research. Airbnb’s mission statement and how it pertains to China, reads as follows: “Our goal is to help create a world where anyone can belong anywhere, and with nearly 1.5 billion people living in China, it’s clear that this country is an important part of our global community.” Chen writes that the company’s ability to navigate, understand, and adapt to cultural norms such as housing structures, family dynamics, and different social credit and payment methods have been a key to the company’s success.
One of the hardest aspects of a western company expanding to another country is understanding and adapting to different cultural practices. Some companies simply expect to carry on the way they do in America, and this can set up a company to fail from the start. Even when a company tries to be sensitive to customs and cultures, a slight misstep can come off as unsavoury to the target customers. Extensive understanding and research into the intricacies of everyday business is of the utmost importance. We recommend for companies wanting to do business in China that creating an online market research community is essential in testing ideas before taking them to your customers.
One of the Fastest Growing Markets
With such a large market as China, the motivation to expand was high. Chen reports that the Airbnb blog reads, “China is one of the biggest and fastest growing outbound travel markets in the world. In just the past year alone, outbound travel from Chinese guests through Airbnb has grown 700%, making it our fastest growing outbound market.” With such a promising market as China, the company brought on two partners Sequoia China, and China Broadband Capital to help them navigate the local market and to create an authentic local presence.
Through market research, Airbnb was able to understand the cultural challenges that they were up against. For one, the idea of accommodation-sharing was not an easy idea to accept. The Chinese culture has a word called guanxi (network of acquaintances) which they rely heavily upon. So to trust strangers with a reliable, safe, and secure stay was a large obstacle that their customers were facing. Another obstacle was the restriction of land ownership, which means that most people do not have vacant rooms or houses that they can rent out. As well, most Chinese people live in apartments and are unable to sub-lease. In addition, most unmarried children remain with their parents unless called away to work in a different city or province.
Filling a Need in the Market
Through this need for work relocation, the demand for short-term rental markets was in favour of Airbnb, especially in high demand cities such as Beijing, Shanghai, and Shenzhen which attract international tourists as well as domestic workers who are moving to these cities. Concerning this migration and need for short term housing, Chen states, “these visitors from throughout China seek better jobs, better education, and better medical care.” This need for short-term rentals has provided the growth the company was looking for.
Airbnb was able to localize and understand the important factors their customers expect. These included: login methods in the U.S. and most western countries take place through Facebook, but Facebook is banned in China so they had to set up logins through China’s main two platforms WeChat and Weibo (the largest social media platforms in China). They have also used personal stories of Chinese Airbnb users to promote usage among non-users in their marketing materials.
Customer service to the Chinese is huge, and they have met that demand by providing customer service for users from 7am to 10pm. They also have created payment options that are traditionally used in China such as Alipay, which is China’s leading third-party online payment solution with no transaction fees. To help meet the need for trust among strangers, the company implemented Sesame Credit which is a social credit system in China. By understanding your customers through qualitative research for online communities you can see where your customers needs are and adapt to meet those needs.
Local Market Adaptation
Through Airbnb’s understanding of the obstacles that stood in their way, they were able to implement solutions to get over each hurdle. By partnering with the two Chinese companies they were able to gain understanding of the local market and find the solutions that their customers would accept. Expanding into new markets is never easy, and that is why market research is critical.
If your company is looking to expand to other markets overseas and is in need of setting up a platform such as a market research online community to help gather data, please feel free to contact us.
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