WorldWarUber:

WhyTheRide
HailingGiantCan't
ConquerThePlanet
(Yet)
SEP 7, 2015 @ 07:30 PM

25,848 VIEWS

DidiKuaidi'snewpresident,JeanLiu,helpedthecompanyraise$2billiontoholdontoitsleadoverUberinChina.
(ShawnKohforForbes)

Ellen Huet

Ellen Huet

Tech

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affects us.
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ThisstoryappearsintheSeptember28,
2015issueofForbes.
ByEllenHuetandLiyanChen
Uberisusedtogettingwhatitwants,
whereveritwants.In60countriesthe
ridehailingcolossushaspursuedan
SUVsizetakeonSunTzu:slipintoa
marketbysurprise,quicklysuffocate
anycompetitorsandifthis
infuriatesentrenchedtaxilobbiesand
governmentofficialsnever,ever
backdown.Uberhasovercomeviolent
taxiprotests,anddozensofplacesthat
oncedubbeditillegalnowhavelaws
codifyingitsbusinessmodeleven
themayorofNewYorkcavedunderan
UberledoutcryinJuly.
ButUberisnowfacingopposition
thatsnotaseasilyrolledasabunchof
feckless,anticompetition
governments.Inthepartsofthe
world,mostlyAsia,whereUberisjust
gettinggoing,thecompanyandits
pugilisticCEO,TravisKalanick,are
facingentrenchedprivatecompetition
onascaleithasneverseen.
InIndiaincumbentsOlaCabsand
TaxiForSurewelcomedUbersrecent

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entrytherebymerginginMarch,
givingthemselvesan80%market
shareandthenraisinganother$400
millionfrompowerfulbackerslike
SoftBankandTigerGlobal.In
SoutheastAsiaUber(whichdeclined
tomakeexecutivesavailablefor
interviews)willhavetocontendwith
threeyearoldGrabTaxi,which
launchedinMalaysia,sharestwo
investorswithOlaandnowalso
operatesacrossfivenearbycountries
Singapore,Thailand,Vietnam,the
PhilippinesandIndonesia.InLatin
AmericaEasyTaxisaysitisbigger
thanUber.

InChina,alreadytheworldsbiggest
marketforridehailingapps,thetwo
topincumbentsalsomerged,in
February,formingDidiKuaidi,a
combinationofDidiDacheandKuaidi
Dache.Thefirmhasatwoyearhead
start,justraised$2billiontothe$1
billionUberhasearmarkedforChina
andaverages6millionridesaday,six
timesUbersselfreportedvolume.
Didicontrols99%ofthetaxihailing
marketand78%oftheprivatecar
marketbyridevolume,accordingtoa
reportfromAnalysysInternational.If
itneedsmorecapital,itcantapits
investorsAlibabaandTencent,Chinas
twobiggestInternetfirms,plus
SoftBank.ThecompetitionfromUber
isjustatinywaveinourprogress,

saysDidiCEOChengWei.
InvestorswhohavebidupUbers
privatemarketcaptoanastonishing
$50billionarecountingonoverseas
growthtomakethatvaluationpencil
out.TheyalsolikeUberstechnology
advantageafterhundredsofmillions
ofrides.Thesesystemsrelyon
algorithmsforrouting,availability
andmatching,forfrauddetection.
Wevebeenatthisalotlongerthan
eitherofourcompetitorsin[China
andIndia].Thatgivesusadvantages
theydonthave,saysearlyUber
investorBillGurleyofBenchmark.

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Buttherivalsareveterans,too,and
theyreformingasupergroup.Last
monthDidianditsbackersatTiger
GlobalandSoftBankleda$350
millioninvestmentinGrabTaxi.
Chinesepeopletravelingto,say,
VietnamorMalaysiawillsoonbeable
topulluptheirDidiappandcalla
GrabTaxicar,andGrabTaxicustomers
willdothesameinChina,akintoa
mobilephoneroamingservice
partnership.Ourcustomersread

Chinese,notEnglishorSpanish,so
theywanttouseaChineseapptoget
accesstoothertravelmarkets,says
DidiPresidentJeanLiu,aformer
GoldmanSachsbankeranddaughter
ofLenovo&#039schairman.
Everyoneissolvingthesame
problem,saysDennisWang,CEOof
EasyTaxi,whichoperatesinpartsof
LatinAmerica,AfricaandAsia.Being
abletodoitlocallyandfaster,forus
thatbalancesoutthecashUberhas.
[Seealso:UberWantsToConquer
TheWorld,ButTheseCompaniesAre
FightingBack]
UbersadventuresinChinaarea
microcosmofhowitsglobalexpansion
mightunfold.Itsgrowth,likeChinas
overall,hasbeenmeteoric.Afteronly
18monthsonthegroundthere,Uber
countsfiveChinesecitiesamongits
toptenworldwidebyridevolumeand
saysthecountrywilllikelyproduce
moreridesthantheU.S.byyearend.
Itslegalstatusremainsmurkyinmost
metroareas.AuthoritiesinApriland
inMayraidedUbersofficesin
GuangzhouandChengdu.The
harassmentcomesdespiteaninfusion
ofatleast$200millionfromthe
politicallyconnectedChinesesearch
engineBaiduanddespiteUbers
decisiontooperateasaseparate
businessentitycalledUberChina,run
byChinesemanagers.

UberstoppriorityinChina,asinany
newcountry,iswooingdrivers.Both
UberandDidihaveturneddriver
subsidiesintobloodsport,often
payingthemtwoorthreetimesthe
fare.Drivershavefiguredouthowto
scamthesystem.Inoneschemethey
buyphonesthatarehackedtohave
multiplephonenumbers,whichallows
adrivertopinghimselffroma
passengeraccount,hopinacarand
collectthebonus.Uberhassaidits
fakeriderateisaround3%,butlocal
mediaestimatethefraudrateat30%
to40%.Didisaysithasalmostno
fakeorders.AGuangzhoudriver
namedLiangsaidthatDidiisstricter
aboutbanningdriversitsuspectsof
fraud.Uber,hesaid,startedcracking
downinthelastmonth.
Didiisfocusednowontearingpages
fromUbersplaybook.Itstartedoutin
taxis,butnowitsprivatecarservice
makesuparoundhalfofitstripsafter
debutinglessthanayearago.Didiis
testingacarpoolingservicecalled
Hitch,abuslineandondemand
designateddrivers.CEOChengis
confidenthiscompanycankeepUber
atbay.ChinasInternetcompetition
isthemostintenseintheworld,he
says,andDidiKuaidiisthewinner
thatsurvived.
AfterChinaandtheU.S.,Indiais
themarketUberlustsaftermost.The
cabwarsthereareintheirearlydays

some97%ofIndiansdonteven
owncars.ButtoseewhatUberisup
against,juststandonabusycornerin
thesultrycoastalcityofChennaiand
countthenumberofOlaCabsthatpass
by.Withathreeyearheadstart,Ola
hasoutrunUberfromthegetgo.It
saysithas80%ofthemarket,is
growing30%to40%monthover
monthandprovidessome750,000
ridesperdayin250,000vehicles,
includingprivatesedans,hatchbacks
andthreewheeledtuktuks.Uber
claimsitgets200,000ridesadaybut
saysitisalsogrowing40%andhas
35%marketshare.Olagotalotbigger
inMarch,paying$200millionfor
rivalTaxiForSure.Olaraised$400
millioninAprilatarumored$2.5
billionvaluation.
Olasdriverbaseisloyal.Before
Kalanickevenlearnedhowtospell
Chhattisgarh,Olastruckdealswith
automanufacturersandIndiaslargest
banktoarrangeinstallmentloan
programssothatdriverscouldbuy
carsandworkofftheloansbydriving
forOla.Wedevisedtheworldsfirst
driverrepaymentsystem,saysOla
seniordirectorofmarketingAnand
Subramanian.Olastartedselling
motorizedrickshawridesinNovember
2014.Uberfollowed.Olacreateda
digitalwallettopayforridesin
September2014.Uberfollowed.Uber
hastriedtoundercutOlaonpriceby
givingbonusestodrivers,justasit

doesinChina.Olahasnever
consideredthatasanoption.Youget
higherqualitydrivers,says
Subramanian,bygivingincentives
basedonearningfivestarratedrides
orgivingacertainnumberofridesper
day.Thismakescustomerswantto
comeback.
Morenascentmarketswerestakedout
earlybyBrazilsEasyTaxi,whichwas
foundedinRiodeJaneiroinJune
2011,monthsbeforeUberbeganits
internationalexpansion.EasyTaxiis
nowupto6millionridesamonth,
with400,000driversin30countries.
InSoutheastAsia,wherefarehaggling
isatradition,EasyTaxipioneeredthe
abilityforpassengerstouptheirbidin
theapptoattractdriversduringrush
hour,amirrorimageofUberssurge
pricing.
Wang,EasyTaxis32yearoldco
CEO,wishesUberluckatwagingprice
warinLatinAmerica.Taxishereare
supercheap,andthereareatonof
them,soserviceisfast,hesays.Hes
investinginplacessuchasSaudi
Arabia,KenyaandNigeria,where
Uberhasdippeditstoesbutthe
marketisstillforthetaking.We
knowhowUberoperatesandhowto
positionourbrandtofight.
UbermadewinningAmericalook
easy.Theroadouthasmorebumps.
ContactEllenHuetat