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China Airbnb rival Xiaozhu gets Jack Ma backing, claims "Unicorn" status
[SHANGHAI] China short-term rental firm Xiaozhu.com has raised US$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 US giant Airbnb.
China's largest house-sharing platform said in a statement on Wednesday that the fundraising meant it was now a "unicorn startup", implying a valuation of over US$1 billion. Airbnb was valued at US$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 alternative options to the traditional tour group vacations of their parents' generation.
Xiaozhu, however, said the Chinese market was not easy to crack, especially for international firms.
"Only local companies with a sense of mission and commitment to the domestic market can stand a chance in gaining leadership in the Chinese market," Chen Chi, Xiaozhu's chief executive and co-founder, said in a statement.
Airbnb, which said earlier this year it was looking to expand its presence in the market, 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.
Both firms 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.
Xiaozhu, often described as Airbnb's Chinese clone, has listings in over 400 locations globally and raised US$65 million last November. Existing investors include Joy Capital, Morningside Ventures and Capital Today.
Yunfeng said Xiaozhu had learnt from Airbnb and that the investment round would help accelerate its growth.
"Going off Airbnb's business model, Xiaozhu has developed a proven successful model for house sharing to develop in China. Yunfeng Capital is looking forward to witnessing and helping Xiaozhu to grow rapidly," Yunfeng managing director Li Na said.