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China's travel market is ready for take off

China's largest travel site, Ctrip, lets users book hotels, flights, and packaged tours around the world. In 2016, an estimated 250 million travelers used the site, making it the world’s second-largest online travel agent. (In 2015, the company booked nearly $50 billion in travel.) Ctrip now owns one of the world's biggest flight metasearch engines following its $1.74 billion purchase of the Edinburgh-based Skyscanner in 2016. And with its recent acquisition of several tour companies in the United States, Ctrip is forming itself into an online travel service that’s part aggregator, part booking platform, and part end-to-end tour operator. In November 2016, Jane Jie Sun became Ctrip’s CEO and director of the board.

Ctrip CEO Jane Sun talked with Forbes magazine and China’s travel boom, and how Ctrip sees its future:

Jane Sun joined small online travel service company Ctrip as CFO in 2005 with the belief she was getting in early on a boom in China travel. The then six-year-old business had managed to list on the Nasdaq in 2003; when Sun joined two years later, its market capitalization was only about $500 million.

Today, Sun leads an industry heavyweight with 33,000 staff. Ctrip’s market valuation of $25 billion exceeds better-known U.S. rival Expedia ($17 billion). Sales grew by 75% in the third quarter as it consolidated revenue with Qunar, the pesky domestic competitor it merged with last year.

Even before that hook-up, growth and momentum had already been rapid owing in part to the expansion and alliances that Sun has helped to engineer and that led Ctrip to name her CEO in November. In the past 12 months alone, Ctrip acquired Skyscanner Holdings, a United Kingdom travel search site for 1.4 billion pounds; earlier last year, it bought two U.S. tour operators that specialize in serving Chinese travelers. And in January 2016, Ctrip invested $180 million for 15% of India’s MakeMyTrip, the country’s biggest online travel company.   All in all, says an upbeat Sun, “Ctrip still has lots of room to grow.”

And yet growth alone isn’t the only thing on Sun’s and Ctrip’s agenda. The company relies heavily on female staff, and is an industry leader when it comes to speaking out about a huge longer-term economic threat in China: its ageing society and limits on family size. The country’s working age population will likely fall by 18% to 827 million in 2050, compared with 1.0 billion in 2015, according to an estimate by the Family Planning Association. To solve the problem, China last year formally ended a one-child policy; women can now have two. Yet that’s not enough, Sun says. “In order to reduce the ageing problem, not only should the government not have any limitation on the number of kids you have, they should encourage people to have more children,” she says. Working with the company’s chairman James Liang – himself a scholar in entrepreneurship and population, Sun has assembled what she says are among some of China’s best incentives to retain female staff while at the same time helping them to be good mothers.

One of Sun’s biggest fans is Liang, Ctrip’s outgoing CEO and a co-founder. When Sun was hired in 2005, “I knew from friends that Jane was a very driven and capable individual. I’ve discovered many other good qualities. Even though she is very nice and sensitive to employees and partners, she is also decisive in action.” Among other things, Liang also respects her passion and confidence about the future: She’s hardly sold any shares since she started at Ctrip. (Sun currently holds a 1.6% stake worth $300 million.) All of that success helped Sun rank No. 15 on the 2017 Forbes China list of outstanding businesswomen in the country unveiled this week.

Shanghai-born Sun’s keen spirit of ambition is long-standing. The high achiever started her university education at Peking University, but gave it up after she won a scholarship to the University of Florida.   Afterward, she worked as an audit manager for accounting firm KPMG in Silicon Valley for more than five years, followed by another eight as the head of the SEC and external reporting division of Santa Clara-headquartered semiconductor equipment supplier Applied Materials.   Along the way, Sun through friends on a trip to Yosemite National Park, met another smart Shanghainese who also found success in America: John Wu, an engineer who was an early employee at Yahoo. The two went on to marry and have two daughters.

When Wu returned to China to accept a job at then fledging Alibaba Group as chief technology officer in 2000, the couple were in the difficult position of a marriage where Wu would only come home to California once a month. In 2005, Ctrip needed to replace co-founder Neil Shen as CFO after he left to start up Sequoia China.   Sun’s global experience helped her land the job.

Early on at Ctrip, Sun focused on normal CFO duties: Talking to shareholders and analysts, building a team, and looking for ways to improve efficiency. ”If our staff can use 10 words to finish a sentence, we will not use 12 words to finish a sentence. Why?  If every staff uses two extra words, the customers will waste a lot of time, and every minute has a cost associated with it,” she said.

Yet also behind Sun’s climb was also a willingness to push beyond her CFO role. “In addition to the normal CFO job, I would reach out to the operations team. If no one had taken care of a problem, I would reach out and fix them.” So by 2012, Sun was promoted to COO. Soon after, she was also leading the international business and international negotiation for partnerships.

By 2015, Ctrip was ready to make Sun CEO. “James talked to me and said you are ready to take on the CEO position. I talked to him and said, ‘I would be very honored,’” she recalled. But instead of jumping on the offer, she asked for time to better shape her team. Responsible for the bottom line since Nov. 16, Sun as CEO says she expects new customers at home to continue to help drive Ctrip’s future growth. “Domestically, Ctrip has a lot of room to penetrate into the second and third tier cities. The majority of people in these cities are still using traditional travel agencies to conduct their travel business.”

International business – now accounting for 20% of the company’s revenue – is also going to be critical. “A lot of Chinese people are making more money, so they can afford going abroad more. Also, visa restrictions for many Chinese travelers are being lifted, and that offers many new opportunities” for Ctrip, Sun says.

The three overseas recent investments made by Ctrip that were led by Sun indicate the widening breadth of Shanghai-based Ctrip’s interests. It bought tour operators in Las Angeles and Las Vegas that cater to Chinese to better serve the growing numbers of Chinese customers traveling to the U.S.; Ctrip also invested into Nasdaq-traded MakeMyTrip as a channel into a unique market. “We believe India has a heavy population growth and they are at the stage where China was 15 years ago,” Sun said. “Although GDP per capital is still quite low, they have the potential to grow their GDP per capita and travelers will increase.  We believe that market is very unique, so we invested. “

U.K.-headquartered Skyscanner, however, may be the most telling: it puts Ctrip in the middle of a non-Chinese market in a relatively big way. “It has a price comparison model but doesn’t do any booking,” allowing Ctrip to share its experience in the air ticketing business, Sun said. “If they can make a reservation for their customers after they do price comparison, then customer satisfaction will increase. There will be a lot of synergy between Skyscanner and Ctrip.”

Those new initiatives come after a financial turbulent year that most analysts say isn’t likely to repeat in 2017. The company’s profit and its share price fell after it acquired Qunar; both improved by year-end.  Longer term, Ctrip’s strengths as a brand leader will also likely help it fend off from newer, pesky rivals in China, says Deutschebank, which does business with Ctrip.

Yet it’s not entirely business and family that drive Sun and Ctrip. The company has taken an unusually high-profile role in talking about China’s ageing problem, seeing it as a threat to China’s long-term economic prospects.   “We want to become a role model, and say that in order to have a healthy birthrate for the country, enterprises need to do a lot to support our working employees,” Sun says. “The government also needs to do quite a lot, for example, providing tax breaks to encourage couples to have children. And individuals also have to work on it, because China’s population birthrate is only 1.5.  To stabilize the population in the country, every family has to have 2.1 children.   China is way below (that),” she says. “We want to be sure that Ctrip establishes a good role model as a good corporate citizen.”  Yet Ctrip isn’t entirely without a business stake in that outcome because more than half of its employees are women; more than a third of its VPs are, too.

To address the problem, Ctrip has focused how to increase childbirth among staff and create incentives to stick with the company. Among its programs: It gives an 8,000 yuan “gift” whenever a female employee has a child. It also offers free taxi rides to work for female staff that are pregnant. For mothers with preschool kids, it also runs a “summer camp” in its headquarters and an onsite nursery. If you are from outside of Shanghai and wish to return to your inland hometown to have children there, Ctrip will also let you work at home.

Sun believes having a female CEO like herself adds a further layer of good communication between female and male workers. “With me, they open their heart. When they talk to James, he’ll say, ‘This is right or wrong,’ and it’s a short conversation,” Sun laughs. “When they come to my office, they will burst out laughing or crying, they feel very natural.”

One long-termer at Ctrip is Yan Li, employee No. 16. The mother of two manages 5,000 of Ctrip’s employees that work at call centers. “The business grew fast early on, and you could get promoted because you understood the customer,” says Yan, whose responsibilities started with hotels, and moved onto to air tickets and now international reservations.  A good point about working at Ctrip: “You don’t have to give up your family to advance,” she said. On the other hand, “It’s a tense work environment and you have to do a good job,” she adds.

Ctrip’s efforts, while socially noble, are nevertheless part of a larger, deepening market-driven alignment between China’s private-sector businesses and the government owing to the declining numbers of work-age citizens in the country. “The need for women to work has to be emphasized, and public policy should encourage women to work,” says Mu Guangzong, author of “The Graying of China: From the Universal Two-Child Policy to Successful Ageing.” “Companies and the government aren’t at odds with each other.”

Sun says the economics of being a good employer for women justify Ctrip’s spending and aggressive programs. “The return is very good. Because our employee retention is higher, the company’s training expenses are lower than they would otherwise be,” she says, underscoring a larger formula for her own staying power and success both in the business world of Ctrip and in life: combining passion with a broader purpose.

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