Co-founder and CEO of Airbnb Brian Chesky sits on a bed at a bed and breakfast in Langa township, Cape Town
It's never easy for American businesses to make it in China. Cultural differences, government interference and the sheer cost of competing in a market that dwarfs the US have frustrated companies ranging from Wal-Mart Stores to Uber Technologies. Those stumbles aren’t dissuading Airbnb, however. This week the home-sharing pioneer announced that it’s changing its local brand name in China and doubling its investment there.

By any measure, the opportunity is immense. In 2015, Chinese travellers spent nearly $500billion (R6.22trillion), and the government expects that number to more than double by 2020 as the country’s middle class expands.

But capturing a major piece of that market will require Airbnb to navigate a far more tangled thicket of cultural issues than what confronted Uber and other tech companies in China. And judging by its efforts so far, it probably won’t be up to the task.

In theory, China should be one of the world’s biggest and best markets for home-sharing. Chinese travellers took 2.2billion domestic trips in just the first half of 2016, up nearly 10.5percent year-on-year. Yet China has only 4 hotel rooms for every 1000 people, compared to 20 in the US. And thanks to China’s housing boom, about 50million empty homes are scattered across the country just waiting (in theory) for paying visitors.

Biggest barrier

But that doesn’t mean Chinese will jump on the opportunity to rent out their properties or stay in someone else’s home. The biggest barrier is establishing trust between owners and renters. In recent years, Chinese consumers have been confronted by scandals ranging from tainted fast food to dodgy pharmaceuticals.

They chronically complain of poor-quality goods and misleading marketing or labelling. And they’re highly suspicious of small vendors. So renting a room from a stranger advertising on the internet won’t come naturally.

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Homeowners, meanwhile, have their own concerns. Many of China’s vacant properties are purchased as investments, and most affluent homeowners - especially those with desirable vacation rentals - will hesitate to open their doors to poorer tourists, who constitute most Chinese travellers these days and who would be the most likely to forgo a hotel.

That reluctance is only heightened by the near-constant stream of news reports about misbehaviour among Chinese travellers at home and abroad.

Bridging this gap in trust will be difficult. But there’s some evidence that local companies - which are more familiar with local customs and concerns - are figuring it out. For example,, China’s biggest home-sharing site, takes the ambitious approach of managing each of the 400 000 properties on its site (or hiring a third party to do so). That includes hotel-like services, such as housekeeping, as well as conducting due diligence to confirm that listings are accurate.

That doesn’t just improve the experience for renters; it also expands the number of properties available by giving owners - many of whom live far away from their investments - less upkeep to worry about and more peace of mind.


Airbnb, with its paltry 80 000 listings in China, hasn’t made any such effort, focusing instead on self-starting younger travellers. Where Tujia arranges for home cleaners, Airbnb’s new investments are focused on curated “experiences,” such as tours of local landmarks, that can be purchased alongside a room. That kind of thing won’t be enough to overcome the cultural barriers inhibiting home-sharing in China. And so far, there’s little evidence that Airbnb is savvy enough to come up with a more appealing approach..

It’s not all bad news for Airbnb. China’s growing tourism market means that even a niche player focused on adventurous young travellers has a big opportunity. Equally important, outbound travel is growing, and Airbnb’s 3 million global listings will remain the best home-sharing option for Chinese who want one.

When it comes to winning China’s local home-sharing market, however, Airbnb should probably check out early.

Adam Minter is a Bloomberg View columnist. He is the author of Junkyard Planet: Travels in the Billion-Dollar Trash Trade.