Ctrip Joins Baidu; Hoping To Rise After SkyScanner Sell Out
Ctrip, through its CEO Jenny Wu is joining the new investment fund from Baidu. The Chinese search engine, launched Baidu Capital last month. The fund has a $3 billion war chest to invest in growth stage internet companies.
Wu was a speaker at the Phocuswright Conference in Los Angeles last week and also talked to Tnooz on the sidelines about her move in advance of the official announcement today.
As managing partner of the Baidu Capital fund, Wu will also be in charge of a dedicated travel fund, provisionally named HJ Capital, to which Ctrip has contributed an undisclosed amount.
Wu will continue to work with Ctrip as a senior advisor, and there is a distinct difference in how she will approach her new role.
"With Ctrip, the investments were all about how to add value to the Ctrip platform, about growing the business in China and globally. The new fund is looking at investments that can generate returns on their own."
HJ Capital is looking at global investments in travel - with suppliers of product as well as technology companies on its radar.
"One thing I learnt from my time at Ctrip is the importance of having strong management, and that for investments to succeed you need to keep the good people in place."
One of Wu's last big deals was the takeover of Bestone, an offline travel agency chain with some 5000 outlets across China. Wu noted that this deal was an offline-to-online play, aimed at bringing more business onto the Ctrip platform.
"The Chinese travel market is very big and dynamic, and there is more innovation to come. It is still only in the mid-teens in terms of online penetration compared with the 40% or so you see in North America and Europe. Chinese travel generally is growing at 10% a year with online growing up to 30%. So a lot of business is still offline, which is where Bestone comes in, but the growth is online."
The Baidu Capital announcement mentions Wu's role in Ctrip's investments in China's Airbnb-of-sorts Tujia and its stake in India's biggest OTA MakeMyTrip. Wu was also keen to talk up its global reach - the often-overlooked relationship with Priceline Group and its European tech play Travelfusion.
The globalisation narrative of Ctrip was a key theme of Wu's Centre Stage interview at the conference. "Globalisation is one of Ctrip's top priorities" she told attendees. In the short-term this means a focus on its "core competencies of technology and service" to handle Chinese travellers overseas. But further ahead the plan is to "leverage these strength to serve more people in other regions."
The MakeMyTrip investment, for example, was made "because it would have been hard for Ctrip to expand in India on its own, so the plan is to grow together."
Reading between the lines, partnerships for Ctrip appear to be the way ahead for its global aims, rather than acquisitions, which is why its Priceline Group tie-up is so important.