> "We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share. I wish the world wasn't that way." (Uber's CEO)
I'm sorry but... isn't this exactly what Uber has been doing to their competitors for a long time in most markets?
don't race to the bottom as a foreign firm against locals in China. you won't win. they will go much lower and harder and longer than you will. they will turn the heat off in the -12C winter and have people coding in their parkas to save cash.
i hung out with some of the Uber e-staff and founders when they were in China. i think the most memorable quote was "there's what works for every other country in the world and then there's China".
i think they stood a chance if they had positioned themselves as an upscale service. foreign brands convey status. they could have had something there that the locals didn't. but that's not what they're doing everywhere else in the world, and i understand them not being willing to split their strategy for the market.
so i guess they went with firepower. and i would guess they knew it had a low chance of success. entry into China is hard. that trail is lined with bodies, every drop of blood sucked dry.
it's difficult understand until you see it for yourself. there are people arranging fake uber rides online to split the subsidies. but they had some idea. it's a big market and Uber has a lot of cash, but $1B is still a big bet with such bad odds.
There seems to be a lot of people parroting that the CCP freezes out foreign firms by onerous Chinese regulations favoring local firms.
That may be the case for a number of different situations. However, Didi Kauidi, China's ride-sharing service, may just be a better offering than Uber.
Last year, it arranged 1.4 billions rides, more than Uber has done worldwide in its entire history. Also, Didi doesn't just focus on private-car services. It lets users pick a taxi, private car, shared car, shuttle van, or bus to pick them up. It also is tailored to the local market. During Chinese New Year, lots of flights and trains were sold out. Didi helped users find inter-city rides at train fare prices.
It also has a few quirks that separate it from Uber. You can book a test drive of new cars (Audi and Mercedes included). And, Didi is also offering a Tinder-like matchmaking service for passengers. As a kid, I was getting it on in the back seat of my parent's Dodge. What a time to be alive.
I'm afraid this is a fight Uber won't win. I just can't see the Chinese internet giants letting an American company dominate this space. Call me jaded, but the world isn't so black and white, and I'm sure in the end Uber will concede to defeat after realizing their biggest competitor aren't playing by the same rules.
It's not jaded, it's an accurate understanding of China's historically mercantile attitude.
I cannot for the life of me think of a single foreign product or company operating in China that China hasn't copied for their own version (or ripped off, like the fake Apple stores). The only exceptions are culture companies, where the brand matters more than the product (Pizza Hut; McDonalds; Starbucks).
Uber already knows this. That's why they've partnered with Baidu and raised $2B from Chinese investors recently.
You really think Travis is going to lose in China? This isn't Google China in 2009. Travis partnered with the crazy guy who got Google kicked out of China.
I won't speculate that Uber will be dominate in China but there's no way they're going away anytime soon.
> Call me jaded, but the world isn't so black and white, and I'm sure in the end Uber will concede to defeat after realizing their biggest competitor aren't playing by the same rules.
Call me a jaded person, but Uber shall have learned a lesson.
When they break the law, its distrupty, when someone else does it, its "unfair".
That would seem to be the default outcome, based on experiences of other American companies in China. It still makes sense for Uber to fight for their place in China, though. The opportunity is too big to just concede defeat. Uber are also probably a bit more street smart than the other American internet companies that have previously failed to establish their place in China.
> I just can't see the Chinese internet giants letting an American company dominate this space
Letting an American company know who in your country is travelling where and meeting with whom for how long would be a risky national-security move even without the FBI and pals advertising their bulldog mentality.
Why does Uber need to be in China again? Why can't they be happy growing their service and providing better services (like better driver auditing and education) for the North American market?
If they spent $1 Billion improving their service it's better than trying to outspend a natively innovating company in China backed by local people running under different rules.
Uber has to be in China because they raised $RIDICULOUS on a valuation of $MORERIDICULOUS. That valuation is premised on the idea that they will somehow be part of the fundamental physical infrastructure of the world, in a more-than-just-taxicab kind of way. Disclosure: I think that this is an absurd premise. But it's their ambition.
So they have to eventually show solid steps on being more than just a taxi company for rich dense North American cities, because they claimed they were worth $MORERIDICULOUS. They have to pursue some more ambitious schemes. One of those is getting a dominant position in the market of the 1/7th of the world that is most rapidly growing in wealth.
Better driver auditing and education? Ha ha ha. Dude their whole strategy is to bleed out poor schmucks that get in debt thinking they are going to hit the jackpot.
The company that's losing $1bn/year, Uber China, appears to be a separate company just focused on China (valued at $8bn against Uber proper's $60 odd bn and Didi Kuaidi's $16.5bn) and so pretty much has to be in China. If that wasn't the case I could see the argument for just not bothering there.
Presumably, the ROI on penetrating the world's largest market is significantly higher than the ROI on a marginal increase to their dominant market share in North America.
> "We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share. I wish the world wasn't that way." - Kalanick
Haha, really? Isn't that how Uber started out, and the quote could well be verbatim from a taxi driver in 2011?
HN commentators are missing the point. Uber's strategy is lifted straight from Groupons playbook: they're expanding aggressively internationally to drive home the message that "HEY LOOK WE'RE A GLOBAL PLAY. WE'RE IN 42 CITIES IN CHINA!"
This will drive up the IPO value. By the time they get steamrolled by the local competitors or by the local regulators (likely both) they'll have sold off their shares to the dumb retail investor.
The fact that the heads of Uber China and its main local competitor are literally family members is very telling....
Any firsthand accounts of Didi Kuaidi pricing from chinese HNers?
I took a few cabs around shanghai in 2008 and was floored at how cheap their prices were.
If Didi Kuaidi is undercutting taxi prices, and Uber is trying to undercut them... ridesharing must be almost free in major chinese cities at this point I'm assuming?
Does anyone know the largest net loss a company has ever had for the year prior to an IPO? Uber must be 2 years max from going public and their losses seem to be accelerating[0].
Last funding raise was something like $2.1B. I suspected uber's burn rate was high but this implies that they're going to be hitting some hard liquidity issues within the next 18 months if they can't perpetually raise capital.
The photograph in the article is of an office for Uber in Hong Kong. Is there any reliable data available about how the company is doing there? Uber is ideal for places with inefficient public transportation; Hong Kong has easily one of the most efficient public transportation systems in the world. Subway, tram, light-bus and easy walkability make Uber seem redundant.
Inefficient transport systems tend to affect the poor. For example, spending an hour commuting to work. Where this is a serious problem, for example India, some jobs even come with a chauffeur. Daily commutes are not Uber's market.
I'm surprised (not that surprised) to hear there's ride sharing apps in China at all. I lived in Beijing for a few months several years ago and the taxis are (for a foreigner) pretty reasonable and efficient. Besides better public transport, taxis were everywhere, some were just motorized three wheeled motorbikes with a little chair on the back. Besides those, one night while getting a taxi to a bar, a random person stopped by and offered us a ride. My Chinese friends negotiated a pretty reasonable price to get across the city.
The point is, I think ride sharing apps have much more competition in China/Asia. It's not just terrible bus systems and inefficient taxi services like in America.
Honestly, I'm not surprised. 滴滴出行 is throwing a lot of money at buying people. I downloaded the app in case I can't get a cab in Beijing, and they keep bombarding me with "15RMB voucher", "50RMB voucher", "50RMB voucher", "25RMB voucher" just to get me to start using the app.
Regular cabs are cheap and plentiful over here. I can go from here to Sanlitun for about 150RMB, which is about 30km. Within 4th ring road, flagging one down (outside of rush hour) is trivial. Public transportation is cheap as well (1RMB for a bus ride, 3-10RMB for a subway ride all over the city). That means that neither Uber nor Didi are competing on convenience, they're competing on price till they've got the market cornered.
And every app over here does it. Wechat pay got themselves advertising spots during the New Years Festival Broadcast last year and has been offering discounts EVERYWHERE last November. McDonalds, Subway, Paris Baguette, literally everywhere. This year Alipay got to sponsor the New Years Festival Broadcast, so they're in catchup mode right now.
Uber may have used the strategy first, but they're late to the party in China. As a foreign company in China, they should have positioned themselves as a premium provider. Look at what Apple did. It's a thing of beauty how obsessed Chinese people are over their iPhones.
So how would Uber have gone about that? Offer premium rides first. Nice climate controlled cars with properly screened chauffeurs. Aim for the people that aren't quite able to afford a full-time driver. Didi can be nicer than cabs, but it's a little hit or miss sometimes. Remove that ambiguity.
Open up an Uber store in Sanlitun. Does an Uber store make sense? No, but then a lot of things do not make any sense here in china, and they still work somehow. Nice modern store, a fancy car somewhere on display, and what would it sell? Gift rides and vouchers. Exploit the Chinese habit of giving gifts and regifting(you can buy fruit in boxes for Chinese new year, why not Uber rides in boxes?), and go wild with it. Wooden box with a red sleeve, containing a scale model of a car with minimal uber branding, some assorted status object and then a red envelope that folds open to reveal an Uber voucher in the X000RMB range, or some fancier rides you can't book through the app (eg. armoured cars/vintage cars/sports cars/helicopters/etc.). In a sense, Didi is already doing some of these.
The point is, if you're trying to get into the Chinese market, don't get into mudfights with Chinese competitors. They'll fight dirty, and if you fight dirty, they'll fight dirtier. Apple didn't come out with a discount phone to beat Xiaomi (which btw, fights REALLY dirty. They sell to distributors ABOVE MRSP to cut their margins. the distributors have to put up with it).
No, go premium, and come early. There's an entire part of the Chinese tech industry that calls itself C2C - Copy 2 China. The moment your startup hits techcrunch, there'll be a Chinese copy of it. That is a law of nature. It will happen to you.
Uber should have known this before throwing down the gauntlet over here. It's not going to be a fun ride for 'em.
I don't understand. Why not just focus on the rest of the world? It is, after all a big effin world. China has always been a different market. What's with this need to monopolize every corner of the world and lose a shiz ton of $ in the process?
Their brand redesign was the beginning of the end. This will accelerate the process. Their team has no clue what it is doing. You can downvote, but this will be a fact sooner than you might think.
On HN every day brings some new event that completely changes everything forever and deserves all our attention and capacity for outrage. Don't you ever find this exhausting?
[+] [-] javiercr|10 years ago|reply
I'm sorry but... isn't this exactly what Uber has been doing to their competitors for a long time in most markets?
[+] [-] nrser|10 years ago|reply
i hung out with some of the Uber e-staff and founders when they were in China. i think the most memorable quote was "there's what works for every other country in the world and then there's China".
i think they stood a chance if they had positioned themselves as an upscale service. foreign brands convey status. they could have had something there that the locals didn't. but that's not what they're doing everywhere else in the world, and i understand them not being willing to split their strategy for the market.
so i guess they went with firepower. and i would guess they knew it had a low chance of success. entry into China is hard. that trail is lined with bodies, every drop of blood sucked dry.
it's difficult understand until you see it for yourself. there are people arranging fake uber rides online to split the subsidies. but they had some idea. it's a big market and Uber has a lot of cash, but $1B is still a big bet with such bad odds.
[+] [-] randycupertino|10 years ago|reply
[+] [-] BrandTurner|10 years ago|reply
That may be the case for a number of different situations. However, Didi Kauidi, China's ride-sharing service, may just be a better offering than Uber.
Last year, it arranged 1.4 billions rides, more than Uber has done worldwide in its entire history. Also, Didi doesn't just focus on private-car services. It lets users pick a taxi, private car, shared car, shuttle van, or bus to pick them up. It also is tailored to the local market. During Chinese New Year, lots of flights and trains were sold out. Didi helped users find inter-city rides at train fare prices.
It also has a few quirks that separate it from Uber. You can book a test drive of new cars (Audi and Mercedes included). And, Didi is also offering a Tinder-like matchmaking service for passengers. As a kid, I was getting it on in the back seat of my parent's Dodge. What a time to be alive.
[+] [-] tonster|10 years ago|reply
Wait, what?
[+] [-] bby|10 years ago|reply
[deleted]
[+] [-] drchiu|10 years ago|reply
[+] [-] rm_-rf_slash|10 years ago|reply
I cannot for the life of me think of a single foreign product or company operating in China that China hasn't copied for their own version (or ripped off, like the fake Apple stores). The only exceptions are culture companies, where the brand matters more than the product (Pizza Hut; McDonalds; Starbucks).
[+] [-] free2rhyme214|10 years ago|reply
You really think Travis is going to lose in China? This isn't Google China in 2009. Travis partnered with the crazy guy who got Google kicked out of China.
I won't speculate that Uber will be dominate in China but there's no way they're going away anytime soon.
Reference to Li (CEO of Baidu), expiring Google in China - https://www.quora.com/Why-is-Google-blocked-in-China
[+] [-] toomuchtodo|10 years ago|reply
Call me a jaded person, but Uber shall have learned a lesson.
When they break the law, its distrupty, when someone else does it, its "unfair".
[+] [-] jfoster|10 years ago|reply
[+] [-] JumpCrisscross|10 years ago|reply
Letting an American company know who in your country is travelling where and meeting with whom for how long would be a risky national-security move even without the FBI and pals advertising their bulldog mentality.
[+] [-] Camillo|10 years ago|reply
[+] [-] reviseddamage|10 years ago|reply
[+] [-] barkingcat|10 years ago|reply
If they spent $1 Billion improving their service it's better than trying to outspend a natively innovating company in China backed by local people running under different rules.
[+] [-] aetherson|10 years ago|reply
Uber has to be in China because they raised $RIDICULOUS on a valuation of $MORERIDICULOUS. That valuation is premised on the idea that they will somehow be part of the fundamental physical infrastructure of the world, in a more-than-just-taxicab kind of way. Disclosure: I think that this is an absurd premise. But it's their ambition.
So they have to eventually show solid steps on being more than just a taxi company for rich dense North American cities, because they claimed they were worth $MORERIDICULOUS. They have to pursue some more ambitious schemes. One of those is getting a dominant position in the market of the 1/7th of the world that is most rapidly growing in wealth.
[+] [-] zouhair|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] tim333|10 years ago|reply
[+] [-] mahyarm|10 years ago|reply
And it's for the same reason why you want visa everywhere. Even if everyone uses unionpay, the travellers want their visa cards to work.
[+] [-] heydenberk|10 years ago|reply
[+] [-] cryptoz|10 years ago|reply
Haha, really? Isn't that how Uber started out, and the quote could well be verbatim from a taxi driver in 2011?
[+] [-] anon8418|10 years ago|reply
This will drive up the IPO value. By the time they get steamrolled by the local competitors or by the local regulators (likely both) they'll have sold off their shares to the dumb retail investor.
The fact that the heads of Uber China and its main local competitor are literally family members is very telling....
[+] [-] kagamine|10 years ago|reply
More on this please?
[+] [-] GigabyteCoin|10 years ago|reply
I took a few cabs around shanghai in 2008 and was floored at how cheap their prices were.
If Didi Kuaidi is undercutting taxi prices, and Uber is trying to undercut them... ridesharing must be almost free in major chinese cities at this point I'm assuming?
[+] [-] brentm|10 years ago|reply
[0] https://www.theinformation.com/ubers-losses-grow-but-so-do-i...
[+] [-] mayneack|10 years ago|reply
I didn't realize they were profitable here. When did this happen?
[+] [-] iaw|10 years ago|reply
[+] [-] jdlyga|10 years ago|reply
[+] [-] intopieces|10 years ago|reply
[+] [-] frozenport|10 years ago|reply
[+] [-] tommoor|10 years ago|reply
[+] [-] melted|10 years ago|reply
[+] [-] josu|10 years ago|reply
[+] [-] patmcguire|10 years ago|reply
[+] [-] tomkat0789|10 years ago|reply
The point is, I think ride sharing apps have much more competition in China/Asia. It's not just terrible bus systems and inefficient taxi services like in America.
[+] [-] 50CNT|10 years ago|reply
Regular cabs are cheap and plentiful over here. I can go from here to Sanlitun for about 150RMB, which is about 30km. Within 4th ring road, flagging one down (outside of rush hour) is trivial. Public transportation is cheap as well (1RMB for a bus ride, 3-10RMB for a subway ride all over the city). That means that neither Uber nor Didi are competing on convenience, they're competing on price till they've got the market cornered.
And every app over here does it. Wechat pay got themselves advertising spots during the New Years Festival Broadcast last year and has been offering discounts EVERYWHERE last November. McDonalds, Subway, Paris Baguette, literally everywhere. This year Alipay got to sponsor the New Years Festival Broadcast, so they're in catchup mode right now.
Uber may have used the strategy first, but they're late to the party in China. As a foreign company in China, they should have positioned themselves as a premium provider. Look at what Apple did. It's a thing of beauty how obsessed Chinese people are over their iPhones.
So how would Uber have gone about that? Offer premium rides first. Nice climate controlled cars with properly screened chauffeurs. Aim for the people that aren't quite able to afford a full-time driver. Didi can be nicer than cabs, but it's a little hit or miss sometimes. Remove that ambiguity.
Open up an Uber store in Sanlitun. Does an Uber store make sense? No, but then a lot of things do not make any sense here in china, and they still work somehow. Nice modern store, a fancy car somewhere on display, and what would it sell? Gift rides and vouchers. Exploit the Chinese habit of giving gifts and regifting(you can buy fruit in boxes for Chinese new year, why not Uber rides in boxes?), and go wild with it. Wooden box with a red sleeve, containing a scale model of a car with minimal uber branding, some assorted status object and then a red envelope that folds open to reveal an Uber voucher in the X000RMB range, or some fancier rides you can't book through the app (eg. armoured cars/vintage cars/sports cars/helicopters/etc.). In a sense, Didi is already doing some of these.
The point is, if you're trying to get into the Chinese market, don't get into mudfights with Chinese competitors. They'll fight dirty, and if you fight dirty, they'll fight dirtier. Apple didn't come out with a discount phone to beat Xiaomi (which btw, fights REALLY dirty. They sell to distributors ABOVE MRSP to cut their margins. the distributors have to put up with it).
No, go premium, and come early. There's an entire part of the Chinese tech industry that calls itself C2C - Copy 2 China. The moment your startup hits techcrunch, there'll be a Chinese copy of it. That is a law of nature. It will happen to you.
Uber should have known this before throwing down the gauntlet over here. It's not going to be a fun ride for 'em.
[+] [-] blizkreeg|10 years ago|reply
[+] [-] wrong_variable|10 years ago|reply
Ghanan kids prolly wont have the money to even afford Uber.
[+] [-] grawlinson|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] zouhair|10 years ago|reply
[+] [-] dang|10 years ago|reply
We detached this comment from https://news.ycombinator.com/item?id=11129670 and marked it off-topic.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] untilHellbanned|10 years ago|reply
[+] [-] VeilEm|10 years ago|reply
[+] [-] ardit33|10 years ago|reply