Airbnb: the future and challenge of experience sharing

December 8, 2016 by christywong Leave a Comment

Airbnb and its hosts are broadening their business. During the company’s annual conference in November, Airbnb’s CEO Brian Chesky announced “experience” and “places” will be the two new features joining “homes” on its app. Besides booking a spare room rental, travelers can now use Airbnb to reserve tours and activities.

These two new features are design to help travelers to make more in-depth planning and to have a fuller travel experience. The launch marks Airbnb’s start of transitioning from a home rental site to an integrated travel-planning platform.

“Places” are the travel guides curated by local hosts or experienced traveller. They are essentially lists of places to go. Hidden artistic corners, must-try restaurants, unlikely music venues, etc. Travelers do not have to pay to read these recommendations. This feature has potential to help Airbnb attract more travelers to view its content. Most travelers like to look for places to go before they take off. Some ask on Facebook, some turn to TripAdvisor. But this new “places” feature offers organized personal recommendations that people can eyebrow base on their own preference.

Some curators may recommend places or activities that they have special access to, and that leads into the “experience” feature. “Experience” allow travelers to purchase travel packages on Airbnb. Currently, about 500 activities are available on Airbnb’s app. They are generally more personal and sometimes more creative than the tours from travel agency. For example, travelers can connect to a film producer who can put up a set for them to try out acting. Or they might stay with ranch owner for a few days to ride horses and harvest fruit. Most of these experience packages have activities on multiple days, cost anywhere from $200 to $1000 and provide amenities such as food, drink and tickets. Like home rental, the experience service providers are also individual hosts; Airbnb remains a platform for people to share and meet.

The expansion didn’t come from sudden. Airbnb has been planning and testing on this launching since a while ago. A “journey” feature was tested in the bay area last year, which encourages hosts to plan a whole trip for travelers. In August this year, an app called Airbnb Trip was available briefly on Google Play Store. Similar to “experience”, Airbnb Trip allowed users to reserve activities in their destination, such as booking a restaurant or connecting with a tour guide. In September, Airbnb acquired a travel site called Trip4Real, which also emphasize on unique local experience. The fact that Airbnb raised $850 million in capital this August at its $30 billion valuation also signals a big move.

It is quite an ambitious transition for a company that has only be in the competitive market for a few years. But Airbnb isn’t afraid of trying, because it has the strongest supporters. The annual conference held three days in Los Angeles’s Orpheum Theatre. Although the admission was between $275 and $345 — and Airbnb does not pay for that fee, over 7000 excited hosts from all over the world still rushed to L.A. Many applied to be hosts of “experience”, but the company decided it was going to be more selective at the beginning. Depending on the market needs, there should be more “experience” hosts joining the party.

Hosts are supportive of Airbnb’s new attempt because they are benefited by Airbnb’s operation. Chinese e-commerce giant Alibaba created Taobao and became the most popular online trading site; one of its keys to success is that it provided individuals the opportunity to become business owner. Similarly, Airbnb offers a chance for individual homeowner to become a host. As of July 2016, listings on Airbnb has exceeded 2.3 million. Some people even make enough that they decide to run b&b full time. Gabrielle Catania for example, owns a house in Oregon that has four guest rooms. Her place is always reserved as she keeps getting fantastic complement on the breakfast she made. Gabrielle spends at least an hour preparing breakfast for her guests. Apple rose is her favorite desert to serve. She enjoys being an Airbnb host, because it gives her a chance to meet guests from different background while making enough money.

Airbnb’s influence over the hospitality industry has been rising drastically since 2013. According to Forbes, Airbnb over 100 million travelers have used Airbnb’s home rental service. The average number of nightly stays is about 500,000. And the valuation of the company has exceeded hotel giant Hilton; about five times of Hyatt.

It succeeded for a reason; Airbnb came in at a perfect timing with extensive understanding of the market and consumers. There are always people with extra space in their homes; many even have extra houses. While renting in long term can be troublesome, many welcoming homeowners are willing to rent short term to travelers. There is supply, and there is demand. Internet has encouraged a culture of sharing. Travelers nowadays are often not satisfied with traditional hotel experience. They want a sense of excitement and belonging for their journey. More importantly, they are usually on different budgets. This is when Airbnb kicks in. It partners with homeowners to offers unique accommodations that feel like home at various prices. Travelers can choose to pay $40 a day to live in a tiny tidy single room in Monterey Park, or they can reserve a beautifully designed luxury villa in Malibu that costs $1500 a night. The prices are very flexible, because the market demand is generally high, and it isn’t too difficult to enter the competition and become a host. So even on a relatively low budget, travelers can still compare and choose from different home styles. They like to be able to choose, so they keep coming back.

The home rental is already making great success. But Airbnb still decides to expand its business, because finding a place to “live” is just the start of a great journey. They are aware of this long before they launch these new features. For a long time, Airbnb has been using slogan “Live there, even if it’s just for a night,” to encourage travelers to value their “living experience.”

But there might be other reasons why Airbnb is expanding to promote travel experience. As a platform, sometimes it is hard for Airbnb to background check every host. Many authorities are worried about some of the listings fall foul of laws, so they try to make policy to implement stricter regulations. The state of New York passed law in October to curtail Airbnb and other short term rentals. To ease the worry, Airbnb has been “compromising” by being transparent to the public and releasing users data. Although the enforcement has been postponed, the future of short term home rental in New York cannot be guaranteed. Airbnb needs an alternative, a new area of business to support its operation if any unpredictable happens.

While Airbnb is making a reasonable business expansion, there might be other problems to consider. Airbnb’s selling point is that its activities are provided by local experts, but many local travel agencies have already been in the business for a long time and know the area very well. Although localization is always on the top of Airbnb’s mind, it cannot guarantee its experience packages to be better than what travel agencies offer. Some hotels may find it hard to keep up with Airbnb because they have established environment, but travel agencies can easily adjust their travel plans and make them more exciting to compete with Airbnb and its proud hosts. At the same time, these local agencies have better relationship and understanding to the government.

Airbnb also needs to be smart on communicating with its hosts if it wants to remain outstanding in the competitive local market. Afterall, Airbnb relies on the hosts to provide great experiences to the customers. It does not interact with the travelers directly. So how can I insure the uniqueness and quality of the service? In a long term, that can be a challenge.

Reference:

https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues

http://www.wsj.com/articles/the-enforcement-of-airbnb-law-postponed-again-1478305423

Airbnb releases first transparency report on government requests for user data

http://www.forbes.com/sites/briansolomon/2016/07/13/airbnb-confronts-racism-as-it-hits-100-million-guest-arrivals/#4fab57e41c3c

Airbnb Now Has 100 Million Users and More Grown-Up Problems

How do internet influencers make money?

November 25, 2016 by christywong Leave a Comment

The economy of Chinese internet influencers has a chance to be even bigger than China’s film market. CBN Data, a commercial data company associated with Alibaba, projected the internet influencers market to worth 58 billion yuan in 2016, exceeding the 44 billion yuan box office revenue in 2015.

“Internet influencer(网红)” is one of the most popular terms on Chinese social medias. They usually refer to individuals with at least half a million followers on social media sites, such as Weibo and other live stream sites. According to Xinhua News Agency, there are currently over one million internet influencers in China, and about 80 percent of them are young female. Many became famous by sharing lifestyle, experience and opinion.

There are a few types of influencers. Some are content creators; they produce content that audience tend to share, such as video clips and twisted photos. Some are “self-media” operators; they managed to build up their own media sites and have loyal followers. Some are live-stream experts; they could live-stream them eating noodle and have thousands of viewers.

Just as on Youtube, Chinese internet influencers deliver the content audience want to see. News; comforting feeds; funny video clips; makeup and cooking tutorials… They are not necessarily as famous as celebrities, but they are the opinion leaders of their own circles. But what makes some of them different from Youtube influencers is that many of them own an online store on Taobao.

Using their social influence to promote their own shop on Taobao is an common way for internet influencers to monetize their social power. Zhang Dayi made about 300 million yuan in 2015 by selling clothing and accessaries on Taobao — doubling the amount of what Chinese actress Fan Bingbing made last year.Items on her site are generally affordable — mostly within 600 yuan. Dayi is the model for her entire clothing line. She is good at personal branding; the proof is that her fans often empty her stock of new arrivals within minutes after order begins.

Live-streaming is another way to make quick money. Most of the live-streaming sites have different gift options for viewers to choose, which allows them to express their appreciation to the influencers. Gift prices vary from one to a couple hundred yuan. The streaming sites take a portion of the gift value (also vary from site to site, from 30 percent to 70 percent), but many influencers are still able to receive a decent amount. Making a couple thousand yuan daily is very common for them.

Many internet influencers also make money by attaching advertisement to their social media posts. Papi Jiang is one of the top influencers in China. She is a content creator focusing on producing satirical video clips, and she has 20 million followers on Weibo. Earlier this year, Papi received 12 million yuan in venture capitol to establish her own short video platform. She is so influential that auction for her advertisement became an public relations event — the bidding went from 217,000 yuan to 22 million.

However, Papi recently announced to end her partnership with the investor and to return all capitol she received. As internet influencers’ traffic highly demand on their update consistency and content quality, how business can cooperate with influencers in longterm still remains a question.

An actual profession: baby formula shopping consultant

November 2, 2016 by christywong Leave a Comment

Being a “shopping consultant” in Australia has potential to earn great returns thanks to the steady high demand coming from the Chinese customers. As an article on Business Insider introduced, Chinese students living in Australia can make up to $3000 a week by selling Australia made health products, such as vitamin and baby formula. Today, shopping consultant has become an alternative to those who do not commit to a full-time job.

Demand for health products made overseas started to rise since China’s Baby Formula Scandal in 2008. Chinese company Sanlu Group was found responsible for producing infant formula adulterated melamine, causing six infants die from kidney stones and about 54,000 infants diagnosed with kidney damage. The scandal led to a long-term national criticism on food safety. Today, when it comes to buying baby formula, traumatized parents still wouldn’t consider products made in China as their first choices.

Since than, many Chinese customers turned to baby products that are made in other countries. Australian product has a great reputation in terms of safety and quality, so it becomes one of the top choices among the Chinese consumers. But the prices of import products at retail stores are often much higher — usually double than the products sold in Australia. One can of formula which costs about $20 in Sydney, can end up charging customers $48 at the retail stores.

That’s when some Chinese living in Australia started to realize the business opportunity. In addition to the sudden raise of demand, a heavy drop in Australian dollar also prompted benefit for this new career. According to Yahoo, in July 2008, one AUD equals to approximately 6.5 Yuan. However, that same Australian dollar could only buy 4.5 Yuan by Mid October, 2008. It was great news for both Chinese consumers and shopping consultants in Australia, because within three months, all products made in Australia became cheaper by almost a third.

Demand for Australian baby formula started to raise dramatically. Some Chinese live in Australia saw it, and decided to start a business. The shopping consultants take requests from the Chinese customers, and buy baby formula from Australian stores. They distribute products in different ways. Some set up online stores on platforms such as Taobao and WeChat; so communicate with customers via WeChat and ship products directly through custom. The expensive international shipping cost is the biggest challenge for these shopping consultants. For example, the Australia Post’s pricing for international standard shipping starts from $21.64 a kilogram. It is essential for shopping consultants to find cheaper shipping alternatives.

The rapid growth of Chinese demand for led to a shortage in Australian baby formula supply. Supermarkets begin to limit the amount of cans each person could buy.

However, a change in Chinese custom and e-commerce ruling announced in April this year has led shopping consultants to a greater challenge. They now have to pay for a higher import tax on products — on postage items, passenger carry-on items, as well as foreign e-commerce transactions. While the revenue is being threaten, they are also facing a competition. Some Australian baby formula producing companies have set up official online stores on Chinese e-commerce platforms such as Taobao and Jingdong. The value of RMB has also been gradually increasing since the end of May this year (1AUD=5.18 Yuan, Nov.1st, 2016). Perhaps the good times for full-time baby product shopping consultants are finally coming to an end.

Wanda’s Hollywood Ambition

October 11, 2016 by christywong Leave a Comment

Wang Jianlin, the richest man in Asia, is trying to change the balance of power in the global entertainment business. As the head and the founder of the largest Chinese commercial property company Dalian Wanda Group, Wang has made decisions to spend billions to buy his way in Hollywood. After the company became the world’s largest cinema chain operator in 2015, it announced several other acquisition and partnership with major Hollywood Studios. While facing critics and doubts, the company is not hiding its ambition to become a global entertainment colossus.

Both Wanda and Hollywood are facing opportunities and concerns. To Wanda, it is shifting focus from property development to entertainment, hoping to start a new chapter of its business legend. Since 2012, Wanda has spent more than $10 billions to invest in everywhere from worldwide theater chains to Hollywood studios. But it takes time to define whether these are financially smart decisions. To Hollywood studios, having Wanda and other Chinese investments backing their projects means they have capitol to make the film they want to make; more importantly, they have access to the restricted Chinese film market. But at the same time, it raises concerns that Chinese might start to have too much influence over Hollywood.

According to Forbes, the 61-year-old Chinese businessman Wang Jianlin has a net worth of $32.8 billion as of November 2016, and his company’s assets amounted to over $90 billion. Before it made its moves on Hollywood, Wanda Group primarily focused on its commercial properties. Founded in Dalian, China in 1988, Wanda first started as a residential property company. To date, Wanda has established 160 commercial shopping malls throughout China.

Starting 2012, the company decided to shift gear to entertainment. Wanda Cultural Industry Group, founded in 2012 and became one of the company’s main focuses, has already become the largest entertainment company in China. Prior to the cultural group, Wanda established its film division, Wanda Media in 2010, which has already become the largest private Chinese film production company. It seems like the company has an obsession of becoming “the largest” or “the best,” and yes, the cultural group aims to become one of the top five entertainment companies in the world by 2020.

This is an aggressive ambition. In hope to make it happen, Wanda followed up with a serious of direct investments, starting with its acquisition of AMC in 2012.

In September 2012, a byline started to appear underneath every AMC logo: A Wanda Group Company. Wanda spent $2.6 billion on this acquisition. AMC was the second largest movie theater chain in the United States at the time, and has over 5,000 thousand commercial movie screens in the U.S., out of a total of 40,759, and the acquisition has made Wanda the largest cinema operator in the world. However, prior to the purchase, theater operators in the U.S. were facing big challenge from low attendance rate. According to New York Times, attendance in North America 2011 fell to $1.28 billion, which is the lowest since 1995. At that time, it was unclear what caused the downfall, but theater certainly didn’t seem like the best investment that would earn Wanda much quick money.

Is it really a good deal for Wanda to buy AMC? At least Wang Jianlin thinks it is.

“It doesn’t matter how much money we make,” Wang was quoted in a Forbes interview. Perhaps rather than getting instant return, his vision is more towards making Wanda a globally known brand. In fact, the act of purchasing AMC had gotten Wanda and himself immediate public exposure. All of the sudden, Western media are writing about a Chinese entertainment company. From a public relation point of view, this is a long-term investment that comes with “free” advertisement.

Moving on to 2015, Wanda spent another $3.5 billion on Legendary Entertainment, one of the biggest filmmaking studios in Hollywood. In the past, Legendary had co-produced many well-known movies including “Jurassic World” and “Interstellar.” Some of its productions are more popular in China than in the U.S., such as “Godzilla” and “Warcraft.” The company’s future productions will likely include more Chinese elements and characters not only because it is now owned by a Chinese company, but also because of the access of the huge Chinese market. The number of movie screens in China has been increasing dramatically since 2009. As of 2015, China has 31,882 screens, which is more than triple to the number in 2011.

Legendary’s upcoming production, “The Great Wall” will release in February 2017. Directed by Chinese director Yimou Zhang and starring Matt Damon, the movie will be distributed by Universal Pictures and two other Chinese distribution companies. This is a giant Hollywood production produced by a Chinese production company – although it wasn’t Chinese until last year.

Just two months after acquiring Legendary, Wanda paid $1.1 billion in cash to settle a deal with Carmike Cinemas, adding 2,954 screens to the AMC family, making it the largest theater chain in the world. The stock prices for both Carmike and AMC raised a little bit right after the purchase, signaling a good start for the merger.

Soon after the deal with Carmike, Wanda tried to make a deal for Paramount. Earlier this year, Paramount was looking for a party to buy 49 percent stake of the studio. Wanda was interested in making about $1 billion equity investment. However, after months of talking, Viacom abandoned the plan to sell in September. In response, Wanda almost immediately announced a partnership with Sony. The exact size of this negotiation was not released, but it is likely to be a smaller investment that won’t give Wanda a lot of initiatives on Sony’s strategic decisions. The company will now provide 10% to 15% in co-financing on some of Sony’s films, including the upcoming production “Passengers.” It will also be Sony’s strongest support on film distribution and marketing in China.

As of now, two months after partnering with Sony, Wanda announced another acquisition for Dick Clark Productions, offering about $1 billion. Dick Clark Productions had produced many television shows and awards, including the Golden Globes and “So You Think You Can Dance.” This acquisition marks Wanda entering the world of television production.

The series of intensive movement is causing lawmakers concern. They are worried that the company’s decisions might have been made in favor of the Chinese communist party, which may perform a “foreign propaganda influence over American media.” Traditionally, Chinese’s cultural presence has not been very strong. So the government has made “enhancing China’s soft power” as one of its priorities. The concerns seems logical especially when Wang Jian Lin is a businessman with a communist party background.

china-hollywood-featured-image

Wang Jianlin explained his business motivation at Wanda’s L.A. Film Summit in October. “Chinese box office revenue has the potential to maintain an annual 15 percent growth for about a decade,” Wang said. By acquiring American companies, he is not only bringing technology and talent back to China, but also opening up the market for the American content. Wang believes his investments will thus be beneficial. And if Hollywood wants a share of this giant market, it needs cooperation with Chinese companies, and it needs to have better understanding in Chinese audience.

Hollywood isn’t the only place Wanda invests in. At the summit, Wang also encouraged Hollywood Filmmakers to come to Wanda’s new movie studio in Qingdao, China. Said to be the largest movie studio in the world, the Qingdao Oriental Movie Metropolis is aiming to rival Hollywood. Situated on a 494-acre site, the studio complex costs Wanda $8.2 billion to build and will open in 2018.

Wanda is not the only one to invest in Hollywood. Other Chinese conglomerates, such as Alibaba and Tencent, have also expressed interest. On Monday, Oct.10, Alibaba announced a partnership between its subsidiary Alibaba Pictures and Steven Spielberg’s Amblin. Earlier, Chinese internet giant Tencent and Hong Kong based information and communication technology company PCCW had also said they would invest $1.5 billion to STX Entertainment.

All those Chinese investments signal greater Chinese influence in Hollywood. However, by far Wanda seems to be the only one determined to enter the game as a main player. All together, Wanda has spent about $10 billion on investment in Hollywood, and certainly is willing to spend more to seal deals with Hollywood giants. Even for a man like Wang Jianlin, that’s still a lot of money. Only one thing can be certain, that the entertainment industry has become one of Wanda’s main strategic focuses. The company said it would become one of the five cultural enterprisers in the world by 2020, and it is keeping up with its ambitious vow.

Other Reference:

http://www.voachinese.com/a/wanda_purchasing_20120716/1405262.html

http://www.theepochtimes.com/n3/2089188-chinas-hollywood-takeover/?utm_expid=21082672-12.JPI1vw8-RKyYhrWpuuXhuA.0&utm_referrer=https%3A%2F%2Fwww.google.com%2F

Wanda’s Legendary Buy Is Just the Beginning of China’s Investment in Hollywood

http://yuleyingtang.baijia.baidu.com/article/649735

http://www.wsj.com/articles/chinas-dalian-wanda-buys-legendary-entertainment-for-3-5-billion-1452567251

Physical stores take hit on China’s e-commerce booms

September 20, 2016 by christywong Leave a Comment

If you haven’t heard of Taobao, you’ve at least heard of Alibaba. Operated by Alibaba, Taobao is the number one online marketplace in China. The founder, Jack Ma, was so ambitious that he wanted business for everybody. So he created an online platform in order to deliver C2C business (with a B2C branch called T-Mall). Taobao leads the e-commerce business in China, but also led a major battle between e-commerce and physical retails.

Taobao was founded in 2003; it was doing alright during the first a few years, but the sales volume really started to grow massively since 2011. Its 2015 annual sales volume was ￥3 trillion, which was more than triple to 2011, and the 2011 annual volume was already larger than the first five years combined.

Source: Taobao, 2015 annual sales volume 3 trillion yuan

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Source: Statista

Take a guess. How long did it take for this online marketplace to generate ￥1 billion volume (approximately $150,000,000) on 2015’s “Singles’ Day Nov. 11th” (the Chinese version of Black Friday)? Seventy-two seconds. The sales number bumped up to $1.5 billion within 13 minutes, and by the end of that day, Taobao reported the final sales number to be $14.3 billion.

A lot of people have been criticizing Taobao, for “destroying” the physical retail business. Of course, Taobao is the inventor of this shopping culture, but this is the money people would have otherwise spent in physical stores.

But we can’t blame the consumers. One of the biggest advantages you get from shopping on Taobao, is that you can buy good value products within a very reasonable price range. We’re buying products made in China in the U.S., because they are cheaper. But surprisingly, the same products often are sometimes more expensive in China. Because although labor in China is rather inexpensive compares to western countries, the cost of housing and rent is scary. In order to remain in business, many retail stores raise the price of their products. You might find a jacket with a brand you’ve never heard of in a random street shop, and it costs more than $150, whereas you can get a very similar jacket on Taobao for less than $50. Now, more and more consumers go to the physical stores to check out the products, and then go home and shop on Taobao, or other similar sites. This leads to a lot more problems. For example, many retailers stopped renewing their leases and turned to online selling, which causes challenges for shopping malls and shopping districts.

However, can we blame Taobao for starting an unfair market competition? Not really. After all, the cost of making a product is still relatively low. Would physical stores become just a testing site for the consumers?

Global Green Economy Index (GGEI)

September 1, 2016 by christywong Leave a Comment

After years of discussions about issues such as climate change, air pollution and resource shortage, sustainable development has become a popular concept that many countries want to improve. Some countries really are trying hard. Germany, for example, has been working everywhere from enhancing sustainable transportation to increasing citizens’ involvement in green policy. But there are also countries which think they are doing enough, yet actions don’t come close to making up for the damage that their economy does to the environment.

It’s interesting that our countries never get tired of competing with others. Imagine a flock of children are trying to prove to their mother, that who’s the one that loves her the most. Some make a lot of money; some take good care of her. In this case, the mother (the earth) doesn’t speak, so we need judges.

屏幕快照 2016-09-01 下午12.21.32

The Global Green Economy Index (GGEI) by Dual Citizen LLC is designed to measure and rank countries’ performances in the green economy. In other words, this is a real indicator of how well countries are treating the environment. GGEI was first published in 2010, and has been acknowledged as one of the main indexes to rank national performances of green economy.

There are two sets of ranking: perception and actual performance.

The perception survey is conducted based on the respondents’ assessment on their own green economy performance. The actual performance is evaluated by expert practitioners. Both results were based on the same set of indicators which lie under four main categories: Leadership & Climate Change, Efficiency Sectors, Markets & Investment and Environment & Natural Capital.

The latest 2014 GGEI report evaluated 60 countries’ performance based on the above categories. Sweden, Norway and Costa Rica are winners of the first three places.

While most of the nations have similar ranking between the two, there are countries that show significant difference. For example, United States is 6^th in perception and 28^th in actual performance. China’s perception ranking is 13^th yet its actual performance ranking is 55^th.

Obviously, the fastest growing economy did not reach its expectation at all. What went wrong? If we break down the four categories, China is investing heavily on the green market, but its efficiency definitely needs to be improved. Environment & Natural Capital is China’s weakest categories, everybody in and away from China wonders when people would be able to breath in Beijing without worrying getting sick. What can the government do to bring this score up? Perhaps that’s what China will get inspired by reading this report.

屏幕快照 2016-09-01 上午3.13.08

GGEI is an important communications tool for policy makers and international organizations, because it is a good reference point. While most countries share a common goal of maintaining a healthy environment, GGEI provides criticism and reflection on different aspects. It helps countries to realize what is working out and what more needs to be done.

The 2016 GGEI report will be available in the fall, according to the Dual Citizen website.

MMM

Money Marks & Media - Spring 2014