China Challenges Uber’s World Takeover

Huge Losses

Travis Kalanick， CEO of the US company Uber， announced a yearly loss of US$1 billion in China， talking at Vancouvers Launch Academy in February， according to Canadian tech website Betakit.

The US$1 billion figure was later confirmed by Reuters News Agency. Uber China opened in February 2014 and has had to compete with major Chinese transport company， Didi Kuaidi.

According to China Internet Network Information Center， Didi Kuaidi currently owns 87.2% of the market.

Kalanick initially dropped out of university in 1998along with six other students to pursue a start-up， Scour， a multimedia search engine， but the com- pany was forced to declare bankruptcy in 2000 when faced with a lawsuit for alleged copyright infringement.

Kalanick cofounded a second peerto-peer content sharing company， Red Swoosh， which also struggled but was eventually sold to Akamai in 2007 for US$18.7 million.

In 2008， Garrett Camp， who had just sold his first start-up， Stumbleupon， came up with the idea for Uber， while struggling with Kalanick to hail a taxi in Paris. Uber， which enables people with private vehicles to earn money by acting as a taxi that other uses can hail through the app， was founded in 2009 and launched for the first time in San Francisco in 2010.

“Thirty percent of our cities are parking for vehicles that were only sit- ting in for 4 percent of the day. Theres just hunks of cement storing hunks of steel instead of being allocated to schools， daycares， and other things we want in our cities. Were creating jobs，”Kalanick enthused at the Launch Academy.

In June 2015， Uber overtook Chinese electronics company， Xiaomi， as the largest “unicorn” start-up， and now has a valuation of US$51 billion， while Uber China alone has a valuation of more than US$7 billion （according to The Wall Street Journal）.

However， despite Ubers economic success in almost 400 cities worldwide， Uber China is struggling to keep up with its Chinese competitor， Didi Kuaidi.

At the Launch Academy， Kalanick talked about the challenge faced by Uber China： “Were profitable in the USA， but were losing over US$1 billion a year in China. We have a fierce competitor thats unprofitable in every city they exist in. but theyre buying up market share. I wish the world wasnt that way. I prefer building than fundraising， but if I dont participate in the fundraising bonanza， Ill get squeezed out by others buying the market.”endprint

At Uber Chinas most recent fundraiser， the company raised US$1.2 bil-lion， being valued at more than US$7 billion. Uber Chinas main investors include HNA Group， CITIC Securities， Guangzhou Automobile and Baidu， giving Uber China access to the latest Chinese mapping technology.

Competitions from Didi Kuaidi

Didi Kuaidi raised US$3 billion in their latest fundraiser in September and hoped to raise a further US$1 billion at the end of February that would bring their valuation up to more than US$20 billion. However， Company President Jean Liu stressed the importance of investors bringing more than money to the table， such as their US$200 million investment from China Merchants Bank， which now also enables Didi Kuaidi to accept credit card payments from their customers.

CNN was told by an Uber spokeswoman that Uber has “the sustainable financial strength to win in China in the long-term… while our largest competitor in China spends many multiples of what we do to buy up unprofitable market shares.”

However， Didi Kuaidi has since refuted these claims， insisting that they have broken even in more than half of their cities. Spokeswoman， Casper Sun， told CNN that Uber was using “fictitious numbers” and that their strategy was “unsustainable and severely challenged.”

Didi Kuaidi， who has recently launched their “express pool” service to save money by car-pooling， is currently in 259 cities and profitable in 100， according to Vice-President of corporate strategy， Stephen Zhu， and currently claims to support approximately 4 million rides per day.

At the end of 2015， Didi Kuaidi announced plans to expand to a total of 400 cities and within three years hopes to have approximately 30 million users per day， and 10 million vehicles registered with its service.

In late 2015， Didi Kuaidi also challenged Ubers international standing， by forming an alliance with Lyft， Ubers main US competitor， which has been valued at US$5.5 billion， as well as with Indias Ola Cabs and South-East Asian GrabTaxi.

Lyft Cofounder， John Zimmer， told CNN， “Our vision was never just about the United States…its just the start.” The cooperation between Lyft and Didi Kuaidi will allow customers to use Chinese payment methods overseas and vice versa.

CEO of Ola Cabs， Bhavish Argal， also commented that the alliance was to“build better mobility solutions in our respective markets.”endprint

Uber announced their own expansion plans， stating that in 2016 they would be aiming to expand to 100 cities in China， targeting cities with populations upwards of 2 million people. Although only operating in 21 cities， Uber China has around 1 million requests for rides a day， around 8 times more than Uber in New York， and claims that China accounts for 30% of their transactions worldwide.

Although Uber claimed to be more successful than their Chinese competitor， Didi Kuaidi recently told shareholders in a letter that they provided 3 times more rides than Uber worldwide， and almost 10 times more than Uber China. On top of this， Didi Kuaidi completed their billionth ride in China in its first year， a landmark that took Uber 5 years internationally to complete.

Didi Kuaidi， initially two competing companies， Didi Dache and Kuaidi Dache， merged in February 2015， at which point they controlled 99% of the Chinese private car-hailing market and had the combined the investment

of Chinas biggest internet companies， Tencent and Alibaba.

The support of Tencent and Alibaba have made it easier for Chinese customers who are able to pay using the WeChat app or Alipay， and benefits Didi Kuaidi by giving them access to their users. Despite their rivalry， Alibaba has also invested in Uber China， allowing them to use the Alipay service， which they plan to also launch in Hong Kong， Macau and Taiwan soon.Tencents attitude towards Uber lies in stark contrast， having blocked Uber from WeChat，providing a ride-hailing button that leads users directly to Didi Kuaidi.

More Troubles

However， Ubers difficulties are not limited to China. Uber has sparked worldwide controversy over the years， facing lawsuits in almost every country it enters concerned with its legality. It has been banned in multiple areas within the United States， India and Australia， as well as being completely banned throughout Thailand and Japan and is most recently facing bans in Moscow and has had to pay US$1.8 million as recompense to the taxi industry in France.In total， it is estimated that Uber has been sued for over US$250 billion worldwide.

On top of this， Ubers responsibility towards their drivers has also become a controversial issue. Not only is it uncertain as to whether Uber should be able to dissociate their drivers from the legal status of employee， by instead labelling them “partner”， but given multiple crimes committed by and towards their drivers， whether Uber should be held accountable for their actions. In August 2015， a driver for Uber China was arrested for alleged robbery and assault of a female passenger at knifepoint， while in Kenya this year， multiple Uber drivers have received requests， only to be assaulted on arrival. Most recently， an Uber driver in Kalamazoo， Michigan was charged with killing 6 people and severely injuring two others in shootings that took place in between the driver taking fares.endprint

“We are horrified and heart-broken at the senseless violence in Kalamazoo， Michigan. Our hearts and prayers are with the families of the victims of this devastating crime and those recovering from injuries. We have reached out to the police to help with their investigation in any way that we can，” Uber announced.

Uber had previously said in a statement， “No means of transport can ever be 100% safe. Accidents and incidents do happen，” following a lawsuit that cost them US$28.5 million for false advertisements and charging customers for an added “safe ride fee”.

The police confirmed Ubers background check that showed the driver had no criminal record， but previous to the shootings， a rider had filed a complaint against the driver for “erratic”driving that Uber had not followed up immediately.In response to this， an Uber Spokesperson told Guardian， “Anything that has a whiff of violence， ‘the driver assaulted me， we suspend the person immediately， but where its something like bad driving…sometimes， its not fair to deactivate them or not give them a warning.”

At the Launch Academy， Kalanick had this to say regarding Ubers international problems： “You have to be open to hard times. What we think in general of risk is not what an entrepreneur sees at risk. Ive run out of money more times than you canimagine.”

It seems that Kalanick is determined to succeed in his efforts at corporate world domination， regardless of cost， monetary or otherwise.endprint