Uber China Vows To Grab Didi Kuaidi’s Market Share

摘要: "Uber began to earn more than it spent four years after it launched in London, so we are not in a hurry since we only entered many Chinese cities less than a year ago."

(Chinese Version)

Wang Ying, Luo Gang, Liu Zhen and Zhang Yanqi

Wang Ying, Luo Gang, Liu Zhen and Zhang Yanqi

"Uber is fully localized in China. Since other Chinese Internet companies also receive overseas investment, we are no different from them in capital levels," Liu Zhen, strategic chief of Uber Technologies Inc's China operations, explained during the 2016 Strategic Conference of Uber held on November 25th. This was also the first time for Uber China’s senior executives to meet the public together.

Ms. Liu seemed quite acute and decisive under the spotlight. She was joined by three new senior executives, including South Region manager Luo Gang, Central Region manager Wang Ying and North & West Region manager Zhang Yanqi. They were all city managers before the promotion, and were selected to form the management board of Uber China and further penetrate second and third-tier cities along with Ms. Liu.

Liu Zhen, strategic chief of Uber China

Liu Zhen, strategic chief of Uber China

Uber China on the rise

I’ve got to say that after Ms. Liu took office, Uber China was expanding faster than ever, especially in terms of financing.

While rumor had it that Uber was having difficulty in raising funds this July, it officially announced that it had raised $1.2 billion in a new round of funding, which was led by Chinese search giant Baidu. In October, Uber China continued to “woo” Hainan Airlines, which invested through the platform of central business district in Tianjin FTA.

During yesterday’s 2016 Strategic Conference of Uber, Ms. Liu confirmed that Uber China had completed its B-round financing. She admitted that there were quite a few SOE-based investors, yet she suggested that what Uber China valued most was not the amount of investment, but the strength of the investor. She predicted that the Chinese market was to surpass the American market and became the largest market for Uber around the world.

Ms. Liu declined to answer if Uber Global was the largest shareholder of Uber China, and referred to it merely as a “strategic investor”. When asked if Alibaba was going to invest in Uber China, Ms. Liu said that there wasn’t such plan yet, but Uber China was open to any cooperation. She added that BAT, the three largest Internet giants in China, were all endeavoring to build their own ecosystem, among whom Alibaba was the most active one, and that Uber China had also been attempting to establish an open, shareable ecosystem. She didn’t think the cooperation with Alibaba would compromise its cooperation with Baidu, since the division between Baidu, Alibaba and Tencent wasn’t as large as many people believed and their relationship could be quite mixed sometimes.

However, it should be noted that Uber China seems to be attempting to change its name to China Uber, which suggests that Ms. Liu and her team might want to have more independence. In October 2015, Uber officially arrived in Shanghai Free Trade Zone with a registered capital of 2.1 billion RMB. Also in October, Uber announced that it would invest 63 million RMB to establish the world’s largest operation center in Wuhan, which again confirmed that it would re-list in the Chinese stock market.

Besides the three new senior executives, Uber China also announced at the Strategic Conference that it would appoint a new CEO after Christmas. Prior to the press conference, Benjamin Chiang, the former general manager of Uber China, has been promoted to the Senior Product Manager of Uber Global.

Expanding to 100 more cities

“China Uber has already been on the fast track and what we need most right now is speed, enthusiasm and decisiveness,” Liu Zhen said so with full vigor. She continued to introduce the performance of China Uber in 2015 to the audience.

“The transaction volume in Chengdu, Hangzhou and Wuhan was 710, 610 and 320 times higher than that of San Francisco as of this May,” said Ms. Liu. She disclaimed Didi Chuxing’s and Analysys International’s statistics and revealed that Uber had actually accounted for 35% of the market share and covered 21 cities across China and that Uber was the number one online car-hailing service provider in many regions.

According to statistics from Uber’s regional senior managers, Chengdu, Hangzhou and Shanghai were some of the most shining markets of Uber around the world. Transaction volume in these cities has surpassed that of New York, Chicago and London, etc. In addition, the transaction volume in Chengdu has surpassed that of New York and become the largest market of Uber around the world as of the first half of this year, while the market penetration rate in Hangzhou and Shanghai has also become the highest across China.

However, when it comes to the achievement that Liu Zhen and Uber China was most proud of is the adoption of region manager model.

It is reported that Uber China used to appoint a city manager in each city, but it later modified the policy and chose to appoint region manager for major regions, so that they can cooperate better with each other.

“Uber is planning to expand to 100 more cities across China over the next year,” Liu Zhen said. For her, second and third-tier cities with a population of over 3 million are the new ‘prey’ of China Uber. She added that “We have both a highly-experienced management team and adequate capital and technology, but we still need to figure out a better way to turn our investment into higher penetration rate. Up to now, the most effective way for China Uber to expand to second and third-tier cities is to repeat our management model through our mature management team.”

“Take Hangzhou for an example, we grabbed the market through quick action. This approach proves quite effective in Central Region of China,” Wang Ying explained. As a matter of fact, although Hangzhou used to be the starting point for Didi Dache, it has already become one of the three largest markets of Uber around the world.

Attitudes towards rivals and revenues

While Uber China’s senior executives met the public for the first time, Didi Kuaidi also revealed that they would hold a major press conference in no time. One can’t help thinking that Didi was publicly challenging Uber China.

According to latest reports of Analysys International, a research firm that tracks online car-booking market, Didi Kuaidi took 83.2% of the market share, Uber controlled 16.2% while Shenzhou Zhuanche accounted for another 13.4% as of the end of the third quarter.

On the one hand, Didi’s expansion has stabilized; on the other hand, Uber China has only set up its management team recently. New brooms sweep clean, so Uber China’s management team might be keen in competing with Didi Kuaidi right now. Will the competition in the Chinese online car-hailing market grow fiercer? Will Uber China continue to adopt the subsidy strategy?

“Focus is the most important thing for any racer. Whatever our competitor is doing right now, we can ultimately outperform as long as we choose the right course and grab the market in time. At present, we shall be devoted to lowering cost by improving efficiency,” Liu Zhen seemed quite frank about these questions.

Anyhow, subsidy policy is the most effective way to win users. “Although subsidy is crucial to penetrate a new market, higher efficiency and better services are equally important,” Luo Gang suggested, “We shall continue to give subsidies on a weekly and monthly basis, but we shall also improve the efficiency of our platform by making full use of our dispatching system.”

The reason why efficiency and technology were attached great importance by Liu Zhen and her colleagues is that they are the key to lowering cost and making profit. Statistics suggest that Uber China has already made ends meet by launching People’s Uber Plus service in Hangzhou and Chengdu. It is reported that Uber China is going to launch its real-time carpool service “Uber Commute” this December in Beijing and Shanghai and expand such service across China by next January.

“While passengers get to enjoy a certain degree of discount via the carpooling service, drivers also get to make much more money per hour compared to picking up a single passenger in the same period,” Zhang Yanqi added, “The rate of effective carpooling service reach as high as 80% in Chengdu.”

Even so, Uber China is still spending more than it earned at present. However, Liu Zhen suggested that Uber was to invest 6.3 billion RMB more in China. “Uber began to earn more than it spent four years after it launched in London, so we are not in a hurry since we only entered many Chinese cities less than a year ago,” Liu Zhen spoke quite frankly.

 

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[The article is published and edited with authorization from the author @Han Pei, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.

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