Uber's Exit from China: A Raw Deal?
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Case Code: BSTR504 Case Length: 11 Pages Period: 2013-2016 Pub Date: 2016 Teaching Note: Available |
Price: Rs.400 Organization : Uber Industry :Chinese Taxi Market Countries : China Themes: -- |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Local Competitors
The Chinese taxi market was controlled by taxi cartels and local transport businesses. It also had established players like Didi Dache (Didi) and Kuaidi Dache, (Kuaidi), and other players like Yidao Yongche and Shenzhou Zhuanche who offered app-based ride hailing services similar to Uber all across major cities in China. At the time of Uber’s entry into China, Didi and Kuaidi controlled more than 99 percent of the market share – Didi had around 55 percent and Kuaidi about 44 percent......
Uber Localizing for Chinese Market
With the stiff competition it faced from Didi and Kuaidi, Uber was prepared to forgo profits initially, in order to attract the Chinese consumers and create a strong customer base. It localized its services for the Chinese market. Its mobile app was colored red to suit Chinese nationalist feelings. Uber conducted special events to attract customer attention. On Chinese New Year Day, it offered its customers a lion dance team to perform at their home or office. Uber even delivered the Apple iPhone 6 to people who purchased the iPhone in its launch in China. On some occasions, Uber delivered lunches and even puppies at customers’ offices.......
Uber's Investments
With the battle heating up between the ride hailing companies in China, their investors who had backed them up with a large line of funding, were in a tizzy. Baidu, Alibaba, and Tencent were the major investors who had backed Uber, Didi, and Kuaidi respectively. Uber fortified its business in China with a strong financial push from investors during June to September 2015. In June 2015, it raised $1 billion to cater to its increasing business volume, with 100 million app accesses per day.....
Challenges and Hurdles
Uber had quite a challenging time in China right from social media blockages to regulatory jolts. Uber’s profile was blocked in ‘WeChat,’ the most popular messaging service in China with 600 million active users...
Regulatory Jolt
Despite severe competition from Didi, (which became even bigger and stronger after the merger with Kuaidi), analysts claimed that it was the regulatory issues which created an uncertain environment for Uber and would go on to play a crucial role in Uber exiting China.....
Strategic Choices and Uber's Exit
In June 2016, Didi became the world’s third highest-valued venture-backed startup with a valuation of $28 billion. It raised $7.3 billion from investors of which $ 1 billion was contributed by Apple...
Exhibits
Exhibit I:High-end UberBlack Cars
Exhibit II:Services Offered by UberChina
Exhibit III:Reasons for Failure of US Companies in China
Exhibit IV:Market Share of China’s Mobile App based Ride Hailing Companies by Active Users in June 2015
Exhibit V:Investments in Uber and Didi up to September 2016
Exhibit VI:New Chinese Ride Hailing Service Regulations
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