The latest big news concerning Uber in China is that it was sold to Didi Chuxing. It’s a huge deal, as over the last couple of years Uber had tried to conquer the Chinese market with its service. Beijing was Uber’s 100th city to launch in globally, and the city with the fastest growth at the time.
Googling the recent merger results in many different articles and perspectives; here is a partial list:
Financial Times – Uber’s battle for China
Fortune – Why Uber Couldn’t Crack China
I do have my personal opinion on this merger, but I’d like to first give you the perspective of a foreigner living in Beijing who used both Uber and later on Didi Chuxing.
When I arrived to Beijing at the end of 2011 Uber didn’t exist there yet; it started running its service only in 2013. At that time Didi, had a horrible app and service. If you weren’t a Chinese speaker it was very hard to handle and understand. You had to send a voice message with your destination and sometimes since my accent wasn’t clear enough for the driver, it just didn’t work. So when Uber entered the market, it was very convenient to use.
Score: 1:0 for Uber
My business partner and I were helping promote Uber through the people we knew, helping to spread the word about the service. By doing this, we gained lots of Uber credit, and adding to the fact that Uber offered promotions frequently, we could ride for a very long with Uber on these credits.
As Uber grew in China, their incentives became smaller and smaller. It started with 100RMB incentive if you bring in a new user, then 50RMB, then 30RMB. This showed the success of the service. Uber got more users in Beijing.
Uber grew among the foreigners living in China and I imagine tourists as well. Though the drivers almost never spoke English, the app was in English and it was possible to get by for a non-native as well. This is how it got its initial user base, I believe.
What’s interesting in this story is that even though it was a substantial company, it never felt like they were established enough in China. People kept saying: “The Chinese government will never favor foreign competition in the market and will shut them down.”
On February 2015, the two major Uber competitors Didi Dache and Kuaidi Dache announced their merger, with the merged company becoming Didi Kuaidi – and it was ready to give Uber a serious fight.
These companies are backed by Alibaba and Tencent, two of the major internet giants in China.
Score: 1:1 – Tie
On September 2015, China’s major internet giant Baidu invested USD 1.2 billion in Uber.
Score: 2:1 for Uber
But at around the same time…
Score: 2:2 – Tie
Score 2:3 for Didi Kuaidi
The most recent acquisition of Uber by Didi actually raised the score on both sides. Uber China was bought by Didi Chuxing, and on the other hand gets a minority stake in the company and additional 1B USD investment. So Uber basically still enjoys the profits from the massive China market. Many see this as a loss. I’m not sure that’s the case, but it’s also not a complete win.
Score: 3:4 to Didi Kuaidi
As for me, Didi Kuaidi caught up on the app interface and now the way it works and looks are very similar to Uber, so I’ve started using it. Now that I don’t live permanently in Beijing and only travel back and forth, it was just easier for me to use Didi and pay using WeChat payment with local currency. Though on my last visit, people told me that nowadays Uber is actually cheaper. Oh, well.
By the way, do you know of any Chinese tech companies dominating the U.S. market?
Image credit by TechCrunch