The online travel industry gives us a peek into India and China

Photo credit: investasianmain

When we’re talking about the startup ecosystems in Asia, China and India are at the top of the list. But both countries are so vast and complex, that it’s hard to get a feel for or a compehensive understanding of what is happening in both.

China, with its plethora of exits, aggressive companies, and massive markets is also a walled garden with a culture Silicon Valley still struggles to conceptualize. China is too often referred to as a sea unto itself, not quite Asia but always representing Asia. But it’s its own thing.

India, on the other hand, seems to be just now waking up. Most of the big rounds (i.e. Flipkard, Snapdeal, etc.) are funded by outsiders and the exits have yet to materialize. And yet, a promise of a large market, with plenty of low hanging fruit, in a country with a select group of highly educated entrepreneurs looks very appealing. Especially since the Valley is dominated by Indians.

Comparing these two countries, economies, and ecosystems, although foolhardy, will allow us a peek into the future of Asia. No doubt, the dragon and the tiger will increasingly exact outstanding influence over the region, and especially Southeast Asia, which is sandwiched between them.

So it’s convenient that we can look at both countries from industry lenses. Online travel is one.

China’s ferocious climate leads to consolidation

When speaking about online travel in China, most people will immediately know Qunar and Ctrip. They’re the largest players in China’s travel booking space, both with multi-billion dollar market caps. Just this year, they were united in a rather bizarre deal with Baidu to swap shares and are now united under the same banner, despite a failed acquisition in 2015 by Ctrip.

The battle between Ctrip and Qunar, although they operate in profoundly different spaces, one in the high-end travel agency booking world, and the other in personalized booking, they’ve still been fractitious.

As Tech In Asia’s Charlie Custer writes, Ctrip’s CEO even set aside US$162 million to battle Qunar in a price war. But undaunted, CC Zhuang, founder and CEO of Qunar, said that Qunar is protected by a moat that Ctrip cannot penetrate.

This competitive spirit might be because of CC Zhuang’s known battle-like style (or is it just a key part of Chinese business a la Romance of the Three Kingdoms?). As CC Zhuang puts it:

“Each and every business unit has to find a competitor which is much stronger than them. And find the people who are willing to take the challenge and put them in the pilot seats. So that’s how we do it. In every business unit in Qunar, they have to find a competitor, if they are very strong, then they have to narrow down the focus.”

It’s a core part of what’s made Qunar such a competitive company in a space dominated by Ctrip.

Ctrip has long been a dominant player in China, booking in over $1.5 billion in revenue in 2014 and 2015. But that’s irrelevant to this discussion, the real issue is that Ctrip and Qunar are the main dominant players in online travel in China, and they’ve just consolidated.

That’s the name of the China game these days. The unification has played right to Ctrip’s favor.

India’s growing climate is still fragmented but big

Learning from tigers and dragons