Rising costs, forced technology transfers and U.S. import tariffs are pushing Taiwanese companies to take their money outside China, sometimes after decades of investment. When it’s time to expand, they scope out Vietnam, for example, or the home market instead of a new operation in China. But a Taipei-based online travel agency is going the other way as part of its quick expansion.
Itinerary planning service KKday entered China in the second half of 2018 because it spied a market and found crucial support from one of China’s biggest domestic companies.
With the backing of internet giant Alibaba, the agency is offering a new kind of service -- localized trip planning for small groups -- aimed at Chinese travelers. KKday's CEO Chen Ming-ming says, “Mainland China is very competitive, but there’s no one like us."
Large But Competitive Market
KKday got going four years ago because Chen's team found that younger Asian travelers were interested in self-styled itineraries but they also wanted someone to arrange details, such as local transport and event tickets, before arrival.
Today, the company's website gets at least 4 million views per week in addition to the users that land on its apps, which has been downloaded more than 1 million times. KKday employs 400 people and has a presence in 11 countries and regions, but it declines to disclose revenue figures.
In early November, the company announced that it had raised an undisclosed sum in its Series B+ venture capital round that was led by Alibaba and Line Ventures, the investment arm of Japan's Line Corp. Existing investors were also said to have participated by committing more capital to the venture. Earlier in the year, its series B round brought in $23.7 million.
In China, KKday sells trips through established internet platforms alongside many of its competitors. But it's easy to see why they care so much about the market: Chinese visitors made 130.5 million trips overseas in 2017, and spent $115.3 billion, according to a study cited here.
Chen points to the fact that most of his would-be rivals customize trips for just one destination, whereas his firm caters to a variety of destinations. 'There are a lot of providers like us, but their itineraries are single-product only, like focusing just on Phuket or Japan, but only we have the scale," he says.
Chen's experience in the travel industry includes founding three other online travel startups before KKday, two went public and a listed Chinese travel agency acquired the other.
“Ming saw the paradigm shift that was happening to the travel industry. Millennial tourists increasingly prefer DIY trips and special experiences, and he successfully launched a startup to serve this growing new segment,” says Jamie Lin, founding partner of AppWorks Ventures, a Taipei startup accelerator that counts KKday as part of its investment portfolio.
KKDay expects to get ahead partly because Alibaba is promoting it through its in-house travel brand and website Fliggy. The Chinese brand with a hefty following already will help KKDay by giving it a "store" and facilitating after-service customer requests, Chen says. Both companies will share the transaction revenue. KKDay has the same arrangements with the Chinese travel agency Ctrip.com and the independent travel platform Mafengwo.
Alibaba's $334 million Taiwan entrepreneurs fund also gave KKday an undisclosed amount of venture capital in November in light of its international expansion and use of modern technology, Chen said. The fund had offered another round of investment earlier in the year. “We’re a pretty international company, one reason we attracted Alibaba,” the CEO says.
“They have a quite a few resources,” Chen says. There's funding and there's Fliggy. More to come? “Companies that have been invested by Alibaba can get into their ecosystem.”
Original news is from Forbes.