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Can Uber Make It In China?

Is Uber's business model good enough to oust Kuadi Didi?

19May

China hasn’t given Uber much of a welcome.

Training sessions have been broken into and police have raided Uber offices in Guangzhou, Guangdong, Chengdu and Sichuan.

That is however the least of Uber’s problems in China - there’s the small matter of a newly formed merger between China’s two top taxi-hailing platforms, Didi Dache and Kuaidi Dache, who combined are thought to have a marketshare of 95%.

Newly named ‘Kuadi Didi’ has been backed by a variety of different media outlets in China to oust Uber, although their Western counterparts remain adamant that Uber has the money and, more importantly, the business model to ultimately take a larger slice of China’s market.

The truth is that the odds are firmly against Uber - China’s full of anti-Western sentiment at the moment, with the news that the US accused 5 Chinese military officials of espionage unlikely to do anything but put fuel to the fire.

Uber’s key to cracking China however is its ‘People’s Uber’ function, which will mean that users will only pay for the driver’s costs and not a penny more. It’s been claimed that this model is purely a PR stunt to better launch the Uber brand to the people of Beijing, and eventually the nation’s other super-cities.

The ‘People’s Uber’ will be the equivalent of UberX in Europe and the US, and will operate as the company’s P2P service, where drivers use their own cars to pick people up. China’s UberX will be driven by professionally licensed drivers, and has to play second fiddle to ‘People’s Uber’ which is the default car selection on the Chinese application.

One of the biggest cases for Uber’s success in China is that Kuadi Didi lacks the rating system that Uber offers, meaning that its riders have a free reign to behave badly due to a lack of accountability. To add to this, Kuadi Didi hailing system doesn’t really work that well - there’s not exactly an abundance of cabs in Beijing anyway, meaning that users have to wait for 10 minutes for a taxi, which could well be smelly and driven by someone who's rude.

Kuadi Didi has made steps to change this and has launched a similar service to People’s Uber, which charges below the standard price for fares. Whilst this isn’t positive news for Uber, it doesn’t spell the end either. Firstly, Kuadi Didi will have to reach out to a new type of driver, someone who’s willing to work in a less structured, and sometimes, lucrative environment. It’s also important to consider that the e-hailing war is rarely fought at a country-level, it’s the battle for dominance in a specific city that matters.

The news that Baidu, China’s most popular search-engine, is to become a key partner with Uber - is likely to stand it in good stead too. More than anything, the chances of Baidu investing in Uber if they weren’t ready to fight with Kuadi Didi demonstrates that Uber has at good chance of succeeding.

Even if Uber fails to shrug off the competition of Kuadi Didi, it’s a big enough country that second place isn’t anything to scoff at - but with Baidu’s aid, I wouldn’t bet against Uber being the number one player either.

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