Uber losing $1B a year to compete in China

> "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.

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.

> "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].

[0] https://www.theinformation.com/ubers-losses-grow-but-so-do-i...

> "We're profitable in the USA, but we're losing over $1 billion a year in China," Uber CEO Travis Kalanick told Canadian technology platform Betakit.

I didn't realize they were profitable here. When did this happen?

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.

Uber is amazing in China. We used it all over Beijing

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.

Target runs a store in Rogers, AR just to spite Walmart. http://www.reuters.com/article/us-walmart-target-idUSTRE73K6...

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?

The gall in that psychopath.

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.