By Scott Cendrowski
March 23, 2017

Airbnb’s new push in China, which includes a cheerful Chinese name that translates into “welcome each other with love,” a travel service aimed at millennials, and a doubling of investments, was instantly compared to another unicorn’s expansion in the East.

Talk of Uber’s failure to build a top brand in China seemed proof that the odds are steep for Airbnb in a market not known for being hospitable to Pollyannish American startups and already crawling with competitors.

But the view is overly harsh. In China’s rapidly growing travel market, unlike ride-sharing, there might be room for several players, even a foreign “unicorn” like Airbnb.

Today, domestic startups dominate China’s tiny home-stay market. They include Xiaozhu and Tujia, with more than 400,000 listings. Airbnb says it doubled its China listings last year, though it still ended up with only 80,000. But unlike its China-centric rivals, which haven’t expanded outside China’s borders, Airbnb is truly a global service, offering 3 million homes in more than 190 countries.

And that’s what important for Airbnb’s expansion. If it is to succeed in China, Airbnb doesn’t need a huge inventory of Chinese homes as much as it does a huge roll of Chinese users who use its service to travel overseas.

One hundred and twenty two million Chinese traveled overseas last year, according to the country’s tourism administration. If Airbnb’s new “Aibiying” brand in China resonates, it can cater to that flood of Chinese visitors, especially the young ones who have no interest in seeing the world through tour bus windows of their parents’ generation. Airbnb says 80% of its Chinese users are younger than 35, the youngest base of any country. Chinese guests using its service rose 146% last year.

This is one reason CEO Brian Chesky made such a big deal about launching the fledgling Trips service in Shanghai. Visitors can use it to book authentic local experiences, like going backstage for a Kun Opera or seeing the 4,000-year-old folk art of crafting dough figurines. If Airbnb follows through on its China push by hiring strong local executives, as is promised, it could be the kind of service that draws in young users who then use it to plan similar escapades in Italy or the U.S.

“They don’t want tour buses. They don’t want tour packages. They don’t want tourist areas. Instead they want local experiences,” Airbnb co-founder Joe Gebbia told Bloomberg. “It couldn’t be more exciting to think about this wave of Chinese millennials that are starting to earn incomes now.”

The dominance of China’s home-share leaders can be misleading too. Tujia’s 450,000 home listings hide the fact that Chinese are skeptical of staying in private residences. Last year, Tujia said it had to take 10,000 properties under its own management to give users a guaranteed experience, which suggested that they couldn’t guarantee nice experiences at its other listings.

For this reason, Airbnb’s 80,000 listing shouldn’t be such a reason for skepticism, nor should the company’s slow pace. CEO Chesky said China was a serious priority more than two years ago. Now that it’s finally following through on that statement, Airbnb is making a different calculation than Uber did in China. Instead of expanding quickly for everyone, it is appealing to a smaller segment of users—young, well-off, potentially global travelers. It is fighting asymmetrically against rivals, where Uber ended up going head-to-head in a symmetric battle with rising Didi Chuxing. If Tujia and other local competitors are Airbnb’s rivals, it is doing its best to avoid them.

Airbnb wants to capture the millennials who travel differently than their parents. Capturing them in China before they hop overseas is the first step.

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