{"id":3470,"date":"2016-08-22T09:20:01","date_gmt":"2016-08-22T09:20:01","guid":{"rendered":"https:\/\/blog.carro.sg\/?p=3470"},"modified":"2025-11-05T17:32:46","modified_gmt":"2025-11-05T09:32:46","slug":"ubers-poison-pill-why-china-is-different","status":"publish","type":"post","link":"https:\/\/carro.co\/sg\/blog\/ubers-poison-pill-why-china-is-different\/","title":{"rendered":"Uber Bows Out: Why China was Different"},"content":{"rendered":"In recent news, Uber\u00a0announced that it will\u00a0be selling all of its businesses in China to ride-hailing rival Didi Chuxing, capitulating to Didi to end a fierce subsidy battle<\/a> in China's ride-hailing market.\r\n\r\nBeijing was Uber\u2019s\u00a0100th city to launch in globally,\u00a0and the city with\u00a0the fastest growth at the time.\u00a0Uber, the Economist noted<\/a>, poured over $2 billion into its Chinese operation, yet never secured more than 20% of the market.\u00a0For years the company had lagged behind Didi, which has an 80% share\u00a0of the Chinese ride-hailing market.\r\n\r\nOn August 1st, Uber finally relented and agreed\u00a0to hand over its Chinese operations to Didi, in return for a 17.7% stake in the combined company\u2019s equity. The company, though, will receive only 5.9% of the voting rights in the new entity. Investors in Uber China, including Baidu, will receive a 2.3% stake. Although additional financial and operational details are still emerging, the sale of Uber China to Didi is a clear indication that the former had\u00a0relinquished its\u00a0ambition to conquer the Chinese ride-sharing market.\r\n

Where did Uber fail?<\/h2>\r\nFirstly, protectionism is widely prevalent in China, even if not prominently\u00a0displayed. Doing business in China as a foreign company faces large hurdles, in part because the Chinese government makes it extremely difficult for\u00a0foreign companies.\u00a0China demands tech companies submit to Chinese regulations on censorship, and this has led to many controversies over the decades.\r\n\r\nCritics also contend that Uber\u00a0was both late to the market, and its business strategy was simply not adaptable to China's culture. Uber first worked with\u00a0Google maps, which does not work well in China, before switching to a local service. Another inherent problem was that it offered a credit-card-based payment system,one that is not widely used in the mainland. Most locals\u00a0prefer to transact via\u00a0WeChat instead, a hugely popular messaging app. But WeChat (whose owner, Tencent, is an investor in Didi), sometimes blocked Uber, consequently wounding its business.\r\n\r\nDidi, however, had a firm\u00a0grip on the local market. From\u00a0working with taxi drivers rather than individual car owners, this move immediately won over local authorities and pleased taxi drivers. Additionally, Chinese riders tend to trust taxi drivers more\u00a0than strangers who happened to own a car.\u00a0In time, Didi added car-pooling and bus-hailing services, much to the\u00a0delight of\u00a0Chinese users.\r\n\r\nEventually, three China trends - urbanization, growing consumer sophistication and the mobile-internet revolution - were crucial to Didi's success.\u00a0Its\u00a0superior understanding and adaptation of local culture, including forming a strategic partnership with WeChat, the dominant messaging service in China, to handles payments for credit card-shy Chinese, sealed the deal for its dominance in the ride-hailing industry.\r\n

What's next for Uber?<\/h2>\r\nWith China settled, Uber can turn to other countries where it\u2019s fighting for market share, such as Grab in Southeast Asia, Ola in India and Lyft Inc. in the U.S.\r\n\r\nBy shedding its massive losses in China, the move could also help Uber clear the path for an eventual initial public offering.\u00a0The Wall Street Journal<\/a> indicates that Uber plans to launch an IPO at some point within the next 18 months.\r\n\r\nUber can also focus its effort on developing some of its other products such as UberEats, the food delivery business.\u00a0A report in the Financial Times <\/em>said that the company is planning to invest $500 million into building its own mapping system.\r\n\r\nSource: Bloomberg, Economist, WSJ","protected":false},"excerpt":{"rendered":"

In recent news, Uber\u00a0announced that it will\u00a0be selling all of its businesses in China to ride-hailing rival Didi Chuxing, capitulating to Didi to end a fierce subsidy battle in China’s ride-hailing market. Beijing was Uber\u2019s\u00a0100th city to launch in globally,\u00a0and the city with\u00a0the fastest growth at the time.\u00a0Uber, the Economist noted, poured over $2 billion …<\/p>\n","protected":false},"author":2,"featured_media":3485,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[727],"tags":[],"class_list":["post-3470","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-announcements"],"_links":{"self":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/3470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/comments?post=3470"}],"version-history":[{"count":1,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/3470\/revisions"}],"predecessor-version":[{"id":16574,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/posts\/3470\/revisions\/16574"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/media\/3485"}],"wp:attachment":[{"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/media?parent=3470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/categories?post=3470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carro.co\/sg\/blog\/wp-json\/wp\/v2\/tags?post=3470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}