Uber hitting a competitive wall in China

Uber has a billion-dollar China problem. When residents of China want to hail a ride via a smartphone app, many are hitting the Didi Kuaidi icon, which gets them a ride from Uber’s chief competitor, affectionately known by millions of Chinese as “Didi.” “We’re profitable in the U.S.A. but we’re losing over $1 billion a year in China,” Uber CEO Travis Kalanick complained in a talk at a Vancouver, Canada startup hub, the Canadian tech-news site BetaKit reports.

Didi Kuaidi has a massive advantage in the Chinese market: the half a billion fanatical users of Chinese messaging app WeChat can call a Didi via the app, which belongs to Chinese Internet company Tencent. Uber has a similar arrangement with Facebook, but Facebook is blocked by the government in China.

In December, Uber boasted that it had booked 1 billion rides globally since starting in 2009, then Didi Kuaidi, with specific reference to Uber, put out its own figure in January: 1.43 billion rides – just in 2015, according to Re/Code. However, Didi wasn’t really playing fair – its ride number came from seven transportation services it provides in China, according to Re/Code.

Kalanick went on to gripe a bit more about its Chinese nemesis.  “We have a fierce competitor that’s unprofitable in every city they exist in,” he claimed, “but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.”

A spokesperson for Didi Kuaidi disputed Kalanick’s claim about unprofitability, saying the company was past the break-even point in more than half of the 400 cities it operates in.

Didi Kuaidi was born in 2015 as a merger between fierce ride-hailing rivals Didi Dache and Kuaidi Dache. The impetus for their merger? Uber’s entry into the Chinese market, according to Forbes.

 

Photo: An Uber app on a phone with traffic behind. (Andrew Caballero-Reynolds/AFP/Getty Images)

 

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  • Jim Bray-Old school security

    Welcome to China, you Americans are greatly confused. China is a Communist county where everything goes including a level playing field. Why do you like loosing $1B. You must if your still doing business in China. A smart Uber would be moving its operations were it is desired.

 
 
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