Growth Strategies and Price‑War Tactics: Insights from Qunar CEO Zhuang Chenchao

During a 2014 "Code Conference" organized by Source Capital, Qunar CEO Zhuang Chenchao shared his experience of a decade of competition that has driven the entire online travel industry into loss, and he outlined how companies should compete, avoid common pitfalls of market leaders, and approach price wars.

1. Growth Strategy

Zhuang explained that after Qunar went public, the company continued to lose cash—about 200‑300 million RMB per quarter—yet the stock remained stable because investors accept sustained loss if a company maintains over 60% revenue growth for an extended period, similar to Amazon’s early years. He emphasized that high growth must be backed by a large addressable market; otherwise, growth rates inevitably slow.

He warned that companies often mis‑define their addressable market, using the example of Ctrip, which treated "online travel" as its market despite the sector’s inherent growth limits. Zhuang argued that businesses should define their market in terms of relatively fixed resources (hotel rooms, airline seats, etc.) rather than fast‑changing segments, to avoid strategic risk when the market accelerates.

He suggested that once a firm reaches a valuation above $100 million and steady revenue, it should regularly abstract its core purpose to higher‑level needs (e.g., "staying out" rather than merely "booking a hotel"), which can reveal new growth opportunities.

2. How to Fight a Price War

Zhuang stressed that price wars should be tactical, not strategic goals. The real objective is to secure exclusive, non‑scalable resources—such as airline seat inventory or hotel rooms—that become barriers to entry once a firm controls a sufficient market share (e.g., 15‑20%). He advocated a staged approach: acquire a small share, lock the resource, then scale up deliberately.

He warned against endless loss‑making; instead, companies should aim for stepwise, “ladder‑function” losses that quickly achieve a target share and then stop, preventing waste and protecting the acquired resource.

Finally, Zhuang argued that for market leaders, maintaining at least 60% growth is more important than profitability; excessive focus on profit can lead to complacency and make the firm vulnerable to aggressive competitors.

The talk concluded with a reminder that many companies fail in expansion because they chase market share without securing resources or having an exit plan, and that disciplined, resource‑focused price wars are essential for sustainable growth.