Abstract

Uber, a US-based car hailing mobile app company which had a firm foothold in 41 countries all around the world, entered the Chinese market in 2013 intending to grab a share of the huge Chinese market and expand globally. But the Chinese market was not easy and Uber faced stiff competition from local players, Alibaba-backed Kuaidi and Tencent-backed Didi. Uber localized itself in the Chinese market and catered to the tastes of the Chinese customers. It fought its Chinese rivals on their core strengths of low costs by offering customers better discounts on fares and giving subsidies to drivers in order to build a market share. It worked in a tough regulatory environment which saw local companies differently from their foreign counterparts. After having fought fiercely and invested billions of dollars in developing market share and building infrastructure, Uber stunned analysts in August 2016 by merging with its rival Didi, which had earlier acquired Kuaidi. The case gives readers a look at Uber’s entry into China and its strategies to develop and grow in the market, and explains how the company localized itself to suit the Chinese market. It also describes how Uber had worked in evolving regulatory environment in China while taking on a huge local competitor – Didi — before merging its Chinese subsidiary with it. The case gives facts to discuss whether Uber adopted the right strategy while entering and also during its operations in China. The case also gives scope for discussing whether the merger with Didi was the only option available to Uber in those circumstances and whether Uber got the right deal.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand and apply the competitive strategies used by market leaders.
• Understand the ways a company can localize its business operations in China and apply the same in going global in emerging economies
• Analyze the competitive situation, extent of rivalry and the forces that are acting to drive the competition (using Porter’s five force model to map the level of competition)
• Evaluate the market opportunities and assess customer value to build market share

Keywords

Travis Kalanick, Didi Dache, Kuaidi Dache, Didi- Kuaidi, UberBLACK, Alipay, WeChat, People’s Uber, Tencent,Google Maps, Baidu, App-based ride hailing service, Subsidy Race, Regulatory Jolt, Ride Hailing Service Regulations, Market Share