Ctrip Liang Jianzhang：We’re not Giving Up Commission Model

After taking Ctrip to the NASDAQ in 2006, Liang Jianzhang, co-founder of the leading Chinese OTA chose to take a break and study Economics at Stanford. Now six years have gone, coming back as a PhD. in Economics with specialties in population studies, Liang took the reins of Ctrip once again, in a time when Ctrip just reached its “Middle Age crisis” with fierce competition and touch rivals out there in the market.

Ctrip’s stock now falls to about $15 in the latest trading day, more than halved from its high around $50.

Though Liang looks more like a demographer rather than a savvy businessman now – and as a matter of fact, he just jointly summited a proposal with 4 other scholars appealing to China’s parliament for a revision of the country’s Law of Population and Family Planning of P. R. China – there’s a lot for him to take now. The whole market has been changing since his departure six years ago. The era of Ctrip and eLong eating up the plate has gone. For instance, meta search Qunar is growing quickly in traffic and offering more products; elong.com is now focusing on hotel booking, which seems to work well.

Furthermore, innovative new booking models are springing up like group-buying, last-minute, vague booking and name your own price. Various products and models make Ctrip’s commission model seem a little bit out of fashion. As to this question, Liang briefly pointed out that Ctrip would not change its model of commission. “We won’t give up the fundamental commission model, but will make it more flexible and versatile.”

Speaking of the price war among Chinese OTA players, Liang said Ctrip surely is on board. The company just announced earmarking US$ 500 million for a year-long promotion in the wake of MangoCity’s RMB 80 million rebates on orders and eLong’s big campaign.

Another rumor of Ctrip will have a restructure in its management team was also denied by Liang. The company was originally founded by Liang and 3 other friends in 1999. Two years later, Ji Qi, one of the four founding member quit and founded the hotel chain Home Inns. 2005, Shen Nanpeng also left and became a founding partner of Sequoia Capital China. 2006, Liang left and Fan Min took over as CEO. There’s whirling speculation that Liang’s coming back might shake the stability of Ctrip’s current management team. Liang rebutted the rumor saying that there would be no changes.

Liang also revealed Ctrip’s intention of entering the mobile area, “Mobile Internet is just one channel, it’s success or not depends on the company behind it.”