The sharing economy exploded in China this year, with companies for all kinds of shareable objects taking part in this new business model. While there are businesses familiar to Westerners—shared offices, cars and rides—there are also ideas that seem a little kooky, such as shared basketballs and umbrellas. Although some call it innovative, many realize these companies are just “rental 2.0” companies, assisted by digital technology. As the concept reaches fever pitch, however, it is also facing a reality check, especially as many firms, ballooned by venture capital funds, start to show signs of failing.
One could be forgiven for thinking that after purchasing Uber’s China operations, Didi Chuxing—which now boasts over 300 million users and over 80% of China’s market—would be on easy street. But things are never that simple in the Chinese market. Figures have shown Didi is losing users and drivers. Under strict Chinese local governments’ new policies, Didi may face bigger challenges than Uber China. Meanwhile more people cast doubts over its business model. Boasting a sharing economy model, car-pooling, the company now relies more on providing car-hailing services with prices lower than taxis to maintain its scale. Once the subsidies withdrew, users walk away.
The battle for car hailing market share has ended with Uber merging its Chinese business with local rival Didi Chuxing. The merger deal gave Didi a market share of nearly 90%. There are many worries and questions following the deal: will government consider it to be an absolute monopoly? Will passengers pay more and drivers being paid less? How will Didi manage to operate Uber China afterwards? To answer those questions we need to understand the history of Didi Chuxing—how it operated in ‘grey area’ and managed to beat so many other local competitors before it merged with Uber China—find the answer in our article.
Yidao Yongche was the first car-hailing business in China. At first, the company was badly affected by opposition from local authorities—but later on was hit by the rise of Didi and Uber China, which became popular through subsidies and low prices. In July, Chinese authorities finally legalized car-hailing apps and stipulated that unfair competition, such as steep discounts and subsidies, should stop. So will Yidao seize the opportunity and grow? Zhou Hang, CEO and founder of Yidao, talks about his company and the future of the “internet of cars”.
Doing business in China has never been easy for foreign-owned companies, but Uber has largely managed to avoid conflict by operating as a separate Chinese subsidiary, Uber China, on the mainland. However, Uber China still faces many challenges: competing with Didi, not being profitable, and even worse, its business has always been riding on a government regulation fence. In a market that is as challenging, and competitive as China’s, the answer to winning over China’s smartphone users lies deeper than just competitive pricing or partnerships.
The opening of the 1960s television show Star Trek which followed the voyages of the Starship Enterprise explained that its crew’s mission was “to boldly go where no man has gone before.” For firms the mission can be quite different as they often have to go where others have already gone. Unless a firm is the first to enter a market, it will face one or more incumbents upon entry. In such cases, how should a firm decide whether and where to enter? A look at how this worked out in the case of Uber and Didi Kuaidi in China’s competitive taxi hailing app market.
China’s internet world is ruled by three big players: Baidu, Alibaba and Tencent, collectively known as BAT. The three companies generated revenues of $20 billion in 2013 and $8.16 billion in the third quarter of 2014. The big three account for a significant, and perhaps disproportionate, share of China’s internet market. Another technology company that has risen to prominence pretty quickly is Xiaomi. BAT and Xiaomi are quickly making inroads into new areas outside their core business—by either investing in or acquiring companies. Take a look at the brand and companies that are backed by these four companies.
Cheng Wei, founder and CEO of Didi Dache, on how the combined entity of Didi Dache and Kuaidi Dache will evolve into a full-service transportation platform
Uber China is going all out to woo customers with quirky promotions. Here’s how.
This week saw the end of Yahoo China, the Shanghai Composite Index peaked, and Uber found an unlikely partner in the Warren Buffet-backed BYD.