The Awakening of The Chinese Travel Giant

 We envisage China to becaome a Major Player in the Travel Industry.

The Investment by Baidu into local metasearch company Qunar can be proclaimed a data point on the timeline of China becoming the largest economy in the world.

America dominates all global economic indicators – absolute GDP, GDP per capita and foreign direct investment but is this going to be for long?

But they are now second in the world in the number of people wired and accessing the intertubes.

China has 200 Million more Individuals connected on the internet in comparison with the parallel USA population It was in the year of 2009 in the month of June when China has overtaken USA in Internet connected individuals numbers.

The publically available terms of the deal are that has bought a majority state in Qunar for $306 million. Previous funding rounds from Lehman Brothers, GSR Ventures Management, Mayfield Fund, and Tenaya Capita raised $25 million.

There have been bigger deals and fundraising activities inside and outside China.  There have been telecoms, manufacturing and industrial deals of greater significance.Let's also not forget the Amount fof Cash reserve China has at hand which is the largest in the world. 

This deal is a marker for two related reasons related to what it says about internet business in China.

Firstly, it is deal between two large search businesses born, grown and raised domestically.

They may have copied business models that were developed in America (Google in the case of Baidu, Kayak/Sidestep for Qunar) but through their growth, adaptation to local needs and ultimately this deal they have shown that the accusation of copycat is unimportant and irrelevant in describing the Chinese economy.

For every web, infrastructure or manufacturing market leader there is in the US, there are a dozen or more companies in China racing for that space. This deal shows that it is a waste of words and analysis to accuse China of being a copycat economy.  A critical marker in the history books for China.

The second reason is that this deal finally proves that acquisition by a US company is not the natural exit for a Chinese Internet company.

The noughties/2000s was the period when US companies pushed into China and it seemed inevitable that US companies would buy their way into leadership while making scores of Chinese entrepreneurs very wealthy.

Expedia bought into eLong in 2004. In the same year Cendant (precursor to Travelport) launched a JV with local travel giant CYTS. In 2006 Travelocity bought out all of its airline co-shareholders totake 100% ownership of Zuji.

The theory was that locals would build it, Americans would buy it and the US would extend its dominance of the internet into the Chinese market. This deal (and others) kills this theory and is therefore an important marker in the part to Chinese economic leadership.

We also have to consider the Socioeconomic satus of Chinese Population and Demographics to think of all aspects of this Travel Trend Evolution.