Airbnb's Clever Strategy in China May Outshine Uber's

Airbnb and Uber are taking markedly different approaches to China. So far, Airbnb looks like the one to back.

The apartment-sharing company stuck a bullseye on China yesterday and started the search for a CEO in the Far East. For now, Airbnb will focus on travel from the country — not to it. It wants to convince Chinese travelers to use Airbnb in other countries, rather than using it stateside.

“Airbnb is smart for not aggressively trying to build a whole inventory in China initially,” Hans Tung, an Airbnb investor with the China-focused venture investing firm GGV, told Re/code. “The best approach is to build a loyal community of fans starting with outbound travel.”

In this way, Airbnb can have its mooncake and eat it, too, by taking advantage of a huge travel market — Chinese travelers took 109 million trips in 2014 — without inciting the wrath of the Chinese government, which is notoriously antagonistic to American digital companies.

This means Airbnb may succeed where Uber is struggling. Uber hasn’t had the option of sneaking in through this particular back door. Since its service is based on local transportation, it has to build up grassroots support in China while simultaneously taking on the regulators.

“They’re raiding offices for Uber all over China,” said Mark Tanner, founder of Shanghai-based research firm China Skinny. “But they can’t go raid Airbnb offices in California.”

To both companies, the Chinese market is key — it’s where they intend to reap returns for their late-stage investors, the last frontier for growth of their core businesses.

Airbnb does face one risk with its slow approach: It might lose ground to homegrown competitors. The so-called “Airbnb of China,” Tujia.com, just raised $300 million in funding at a $1 billion valuation. Tujia focuses on high-end, entire-home vacation rentals — similar to HomeAway — and it can grow both sides of its marketplace as Airbnb bides its time.

This article originally appeared on Recode.net.

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