This month train stations and highways around China are
experiencing peak volume, as hundreds of millions of the country’s citizens
travel to celebrate the Lunar New Year Spring Festival.
The Year of the Pig officially began February 5, but Chinese
people celebrate it during a 40-day travel rush period known as “Chunyun,”
which this year runs from January 21 and March 1.
During that time the government estimates more than three
billion trips will be made, up 0.6% over 2018, with an 8.3% increase in train
trips and a 12% increase in air travel.
Growth in travel is not confined to this celebratory period,
however. Chinese people traveling year-round have made the country the world’s
largest outbound travel market - and it's only getting bigger.
The China Outbound Tourism Research Institute (COTRI)
forecasts an increase of 11% year-over-year in 2019 to a total of 180 million
border crossings from Mainland China, with 49% of those trips ending in Greater
China (Hong Kong, Macau and Taiwan) and 51% going to other destinations around
And for millions of Chinese people, those travel plans are
inspired, researched and booked through Ctrip, the country’s largest online
travel agency and also one of the largest players globally.
It’s been 20 years since James Liang and three others
founded the Shanghai-based company and in that time Chinese tourism has boomed –
and Ctrip has ridden that wave.
In its financial report for the third quarter of 2018 – the most
recent results available – Ctrip reported net revenue of $1.4 billion, a 28%
jump from the previous quarter and 15% increase from the same period in 2017.
The company has acquired several other brands in recent
years, including Skyscanner, Trip.com and Tours4Fun, and now has 40,000
For the second piece in our China theme month, we talked to
Liang - now the company's chairman - about Ctrip’s ambitions, his outlook on the Chinese economy and why the
country is at risk for a slowdown in innovation.
You were educated in the United States – at Georgia Tech and
Stanford – and then worked for Oracle for several years before co-founding
Ctrip in 1999. What did you learn in your time in the U.S. that impacted the
development of Ctrip?
My experience studying and working in the U.S. was extremely
valuable. After studying at Georgia Tech, I joined the R&D team at Oracle,
where I gained rich experience in research and development.
During that time, I
paid a visit back to China, and realized how many great opportunities there
were. I decided to move back to China, applying for a management position as
consultant director for China at Oracle.
During my work there, I provided
advice to multiple Chinese companies on their management, software and
e-commerce, as well as helped to established management systems for several
large companies, experience which proved essential when we founded Ctrip.
that time in late 1990s, the Chinese government was making great efforts to
promote the technology sector, creating an ideal opportunity for us to start
Ctrip, combined with my technology background and management experience.
What are some of biggest things the west does not understand
– or misunderstands – about Chinese travelers?
Chinese travelers not behaving appropriately while abroad
has long been a topic of hot debate among Westerners. It is estimated that
Chinese travelers made 148 million outbound trips in 2018.
Within such a large
data set, the relative numbers of travelers who misbehave is small, but the
absolute number is high, which means it is a phenomenon that has attracted
Westerners also have an image of Chinese travelers all
loving to go shopping for luxury goods.
However, what may surprise many is that
according to a recent survey the interests of Chinese tourists traveling abroad
have changed greatly in the past few years. Now, sightseeing and sampling local
cuisine are the most popular past times for Chinese travelers, more than
I believe that Westerners’ impressions of Chinese travelers
will further change significantly in the future as China continues to develop.
This will particularly be the case when younger generations of Chinese born in
the 80s and 90s begin to dominate the travel industry, as they are on average
much better educated and more aware of Western norms.
According to Phocuswright, Ctrip is almost on par with
Expedia and Booking in terms of gross bookings – what will it take to surpass
Booking Holding and Expedia are both great players in the
industry. In terms of gross merchandise volume, we are now the leading online
Ctrip is positive, confident and enthusiastic about the
potential of the tourism industry, both in China and in the world. Our growth
still relies on the evolvement of globalization, and I’m convinced of more
great opportunities in the future.
On January, 19, 2019, we held our annual
meeting in Shanghai and I mapped out Ctrip’s vision for the future, which is to
become the biggest, the strongest and the best company in the global travel
We will continue to provide the best service, the best technology and
the best products to travelers travelling from anywhere to everywhere.
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What are Ctrip’s ambitions in the west?
As far as I know, I haven’t seen any successful case studies
about a Chinese service-oriented company succeeding in setting up their
overseas market. That’s the ambition for Ctrip, which we are working hard to
Technology is the one of the dominant advantages for Ctrip when we are
competing with other players in the industry.
We have also gradually expanded
our footprint through mergers and acquisitions, such as our acquisition of
Skyscanner. We are very competitive in China and some Asian markets. Europe and
U.S. are not our key focus yet.
We know it’s all about mobile for Chinese travelers, and
Ctrip’s app has much more rich content and location-based information than
western counterparts. Why do you think Western travel companies have not built
equally robust mobile interfaces?
China’s large population and the scale of the market has provided
opportunities in sales prospects and other aspects to a great number of
companies around the world, including Ctrip.
China’s has also undergone a
uniquely rapid development in the internet and mobile industries. We took this
advantage when we launched our mobile app in early 2010, continuously pushing
for innovation. Today around 80% of our transactions are from our mobile
Comparatively speaking, as I understand, Western users still prefer
booking their trips via their computers. This might be a key reason for this
Ctrip, with our 300 million members, has been focused on
providing premium travel services for the past 19 years, bringing us an
industry expertise that allows us to provide bountiful travel content and
information to our customers.
Moreover, we also greatly encourage our
innovation and entrepreneurship among our employees, and we seek to incubate
their projects. All of these three aspects have helped Ctrip maintain its
position as an innovative leader in the industry.
The growth of China’s economy slowed quite a bit in 2018 and
Ctrip’s stock struggled in the last year. What were some of the key factors
that impacted Ctrip’s stock? And what is your outlook for the coming year?
I am very optimistic about the long-term prospects of the Chinese economy,
especially China’s tourism industry.
2018’s data showed that despite the
downward pressure on the overall economy, the tourism industry was and will be
still very healthy, outpacing the overall economic growth rate. This trend will
continue and become more pronounced in the future.
As you mentioned, at Ctrip’s recent annual meeting you
expressed a determination to make Ctrip not only the biggest company in travel
but also the strongest and the best. How will that happen?
We still have a lot to learn from our peers, but we are
confident in our desire in the near future to become not only the largest
company, but also the very best company in the industry.
We will continue to
strengthen our core competitiveness in terms of service, technology, and
In terms of innovation, we seek to lead the industry’s development
through the expansion of our innovative services. For example, in 2018, we
launched high-speed rail tours and opened thousands of offline stores.
In terms of service, we have continued to focus on our
philosophy of putting the customer at the center of everything we do, providing
24/7 service to customers around the world and creating value for them during
We leverage 50TB of data generated daily on our platform by 300 million Ctrip members to analyze and understand demographics, customer demands and travel behaviors in order to offer tailored products or services.
James Liang - Ctrip
Our platform enables our partners to benefit from Ctrip’s
ecosystem and empowers them to provide better service to more customers.
Whether you are the owner of a homestay, you want to open an offline store, or
you are a tour guide, there will always be a place for you on Ctrip platform
where you can get help with your business development.
Last but not least, we will continue to ramp up our efforts
in social responsibility.
We’ve made meaningful attempts to improve the
education of disadvantaged groups such as children in poverty-stricken areas and
to help migrant worker family members come to the city for reunions.
Ctrip’s users generate huge amounts of data as they use the
platform. How are you using that data to improve customer service?
We leverage 50TB of data generated daily on our platform by
300 million Ctrip members to analyze and understand demographics, customer
demands and travel behaviors in order to offer tailored products or services.
We are now much more pro-active and open about this
approach. Last December, we held the first ever Ctrip Day, where we analyzed
the travel business by inviting partners from across the industry.
The key aim
of the day was to show how our big data can empower our partners through the
Partners such as travel agencies, offline stores and
customized travel planners can all access Ctrip’s big data, helping
revolutionize their approach to products, pricing, services and finance.
In recent years, Ctrip has made some notable investments and
acquisitions, including taking a major stake in MakeMyTrip and the acquisitions
of Skyscanner and Trip.com. What types of companies are on your radar for
future investments or acquisitions?
Ctrip is committed to the travel industry and this remains the core of our
business. This is reflected in the fact that all the investments we have made
are related to travel and tourism.
Last year, we invested in Boom Supersonic, a
leading start-up in the supersonic airplane space, supporting the acceleration
of Boom Supersonic’s new Mach-2.2 airliner.
When the Mach-2.2 is in operation,
travel times will be greatly reduced. For example, a flight from San Francisco
to Shanghai will only take six hours, compared to the current duration of 11
Going forward Ctrip will continue to concentrate on the tourism industry,
making investments in companies which are industry leaders, adhering to our
mission of “making travel happier.”
Ctrip has an interesting relationship with Booking Holdings.
That company has invested close to $2 billion in Ctrip since 2012, and yet on
some levels you compete – Kayak vs Skyscanner for example. And Booking has made
investments in Meituan Dianping, which has a growing hotel booking business.
What does Ctrip need from Booking right now? What does Booking need from Ctrip?
Booking Holdings is our investor and partner. Gillian Tans, the CEO of
Booking.com, is an observer on Ctrip’s board.
I know Booking.com attaches great
importance to China’s tourism industry, considering the scale and its
Ctrip has a dominant position in China and is competitive in some
Asian countries, and our partnership can benefit Booking.com in improving its
influence and market share in the region.
We share hotels inventory with each
other, enabling customers choosing the most competitive products around the
world, which helps Ctrip provide better and more competitive overseas hotel
products for customers.
Globally, both Booking and Ctrip are the key players in
the industry and our partnership will create more value to the travelers around
You stepped down as Ctrip CEO in November 2016, with Jane
Sun taking over. How are your two roles defined?
I work with Jane very closely. At the moment, I pay more attention to the
company’s innovation, internationalization, technological development,
investments and strategic alliances.
As the CEO of Ctrip, Jane focuses on the
overall management of the company, including business planning and operation,
organizational structure and training of personnel.
You published a book last year – The Demographics of
Innovation – in which you explore the link between a country’s economic growth
and innovation and its demographics, and for China you’ve said the pace of
innovation will slow after 2030 because there will be a much smaller cohort of
young entrepreneurs. What can you do to counter that?
In my opinion, a young population is crucial for a nation’s ability to
innovate. After 2030, the demographics of the Chinese workforce will become
much older and there is a risk that China’s economic growth will slow.
take 20 years for these demographics risks to emerge, and in terms of
government policy, I would suggest the following four aspects are most
important – liberalizing birth control policies and encouraging fertility;
increasing the educational opportunities; liberalizing the household
registration system and increasing exchanges with other countries.
with the support of appropriate policy, China will be able to maintain a normal
fertility rate with a healthy demographics, and China’s income per capita could
reach 60% of the current U.S. level.
Looking back on what you’ve learned since co-founding Ctrip
20 years ago, what advice do you have for travel startup entrepreneurs?
I would say, concentrating on your industry. Ctrip has always focused on the
travel industry, starting as a hotel reservation provider and becoming a
one-stop travel platform and ecosystem.
This success is a result of almost 20
years of hard work and keen focus on travel, reflected in the fact that in
terms of gross merchandise volume, we are now the leading online travel