| Abstract: |
In a large number of sectors, Chinese internet platform firms have grown to
enormous size leveraging a rapidly growing, largely protected domestic market
This paper describes the formation and growth of the largest Chinese travel
and tourism platform, Ctrip within the context to the changing Chinese
economy. In 2018, Ctrip was one of the largest travel platforms in the world
and, though still significantly smaller than the US travel and tourism
platforms that dominate most of the rest to the world, it was growing far
faster than them. Ctrip’s remarkable success is explained within the context
to the rising tide of Chinese tourism. The paper explores Ctrip’s recent
globalization strategies suggesting that it intends to expand beyond just
serving the Chinese market or Chinese tourists in global markets. At this
point, the globalization strategy appears to have two prongs: The first prong
has been using its enormous cash flow to acquire or co-invest in local firms
that dominate other developing country markets that are expanding rapidly. The
two cases in point are its equity investment in the Indian travel giant,
MakeMyTrip, and investments in Southeast Asia. The second prong is investing
or acquiring firms/websites in developed nation markets that can either
service the enormous flow of Chinese tourists it controls or provide services
to Western travelers. For these investments, Ctrip can provide infrastructural
and capital support to allow these operations to expand more quickly. It is
uncertain how successful Ctrip’s initiatives in international markets will be.
However, given that Chinese tourism is likely to continue its rapid growth and
that Ctrip monopolizes this market, it has significant financial resources,
enormous leverage in directing this flow of tourists for strategic advantage,
and a rapidly developing capability in analyzing the enormous inflow of data
that it receives. For the reasons we describe, Ctrip is likely to be an
increasingly formidable competitor to the US global travel and tourism
platform giants, Expedia, Priceline, and TripAdvisor. |