SHANGHAI/BEIJING (Reuters) - Chinese house-sharing platform Xiaozhu.com has raised $120 million in a funding round led by Jack Ma’s Yunfeng Capital, boosting the firm’s financial muscle as it looks to compete with local rival Tujia.com and U.S. giant Airbnb.
The country’s largest short-term rental firm platform said in a statement on Wednesday that the fundraising meant it was now a “unicorn startup”, a venture capitalist term referring to firms that hit valuations of more than $1 billion. Airbnb was valued at $30 billion in a fundraising round last year.
China’s fast-growing middle class is driving a boom in domestic tourism, with younger millennials increasingly looking for alternatives to traditional tour group packages, which are popular among older travellers.
Xiaozhu, however, said the Chinese market was not easy to crack, especially for international firms.
“In terms of proving a business model that works in China and growing it to scale, this can only be done by a local company, though foreign firms may win a portion of market share,” Xiaozhu chief executive Chen Chi told Reuters.
Airbnb, which said earlier this year it was looking to expand its presence in China, denied in April a Chinese media report saying it was in talks with Xiaozhu to work together in markets such as Japan and South Korea.
Chen said that his firm was open to working with other companies either in China or overseas.
“We don’t rule out the possibility of working with any overseas platforms, including Airbnb... We are open to cooperation in the China market, so it depends on how the other side views us,” he said.
Both Airbnb and Xiaozhu had to withdraw their listings in the Chinese capital Beijing in October when the country held its sensitive five-yearly Communist Party Congress, underlining the challenges in the market of juggling business and politics.
Chen said the political element was one “unique” aspect to operating in China, which gave local firms a further home advantage against overseas rivals.
Xiaozhu, often described as Airbnb’s Chinese clone, has listings in over 400 locations globally and raised $65 million last November. Existing investors include Joy Capital, Morningside Ventures and Capital Today.
Xiaozhu was open in the longer-term to going public, but had no clear listing plans, Chen added.
“If clear rules and regulations are implemented for this industry over the next two to three years, a big barrier to a listing will be removed,” he said
Reporting by Adam Jourdan; Editing by Stephen Coates and Sam Holmes