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Uber Spends Heavily to Establish Itself in China

Discussion in 'Hong Kong' started by Dreamer, Jun 8, 2015.

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  1. Dreamer

    Dreamer
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    HONG KONG — Uber is spending money at a breakneck rate to crack the China market — even paying its drivers more than the fares they collect.

    Fat with almost $6 billion in venture capital, Uber, based in San Francisco, is doling out bonuses up to three times the amount of its fares, in a bet that its exceptional rise in the United States can be matched in China.

    So far, its strategy is working, shattering prevailing assumptions that young American tech companies cannot compete against local rivals.

    The spending spree has attracted droves of drivers like Jacky, a systems analyst at an international telecommunications company, who recently began moonlighting for Uber with his Ford Fiesta in Shanghai. In late May, Uber said it had created more than 60,000 jobs in China over the past month, with the spread of its service spurring protests from some taxi drivers.

    “This is a really great opportunity for me to make some extra money,” said Jacky, 34, who declined to give his full name because he was releasing internal information about Uber.

    Though other ride-hailing services also offer driver bonuses, Jacky said Uber pays the most. In the first three weeks of May, he said, he made the equivalent of about $1,000 from Uber — or almost half of his $2,100 monthly salary at the telecommunications company — with the majority of his earnings as a driver coming from the subsidies.

    While China represents huge scale as a market, it has fended off the entry of just about every major Western technology start-up. Uber, a five-year-old company that operates in more than 310 cities and 58 countriesworldwide , faces homegrown Chinese rivals like Didi Kuaidi, which has more than 90 percent of the market and is backed by two of the largest Chinese Internet companies, Alibaba and Tencent. It also may have to grapple with a fickle central government that could shut it out of the market overnight.

    Yet more affluent and cosmopolitan Chinese have flocked to Uber’s service, attracted by fares that are on average at least 35 percent cheaper than taxis, with the cars generally more luxurious than cabs and drivers who offer free water and are typically more polite.

    Uber is now providing more than 100,000 rides a day in China, according to two people with knowledge of the company’s internal metrics, who declined to be identified because the numbers are confidential. That is about 10 percent of the total one million rides a day that Uber said it was getting in December.

    http://www.nytimes.com/2015/06/09/t...eavily-to-establish-itself-in-china.html?_r=0
     
  2. Lidman

    Lidman
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    Once the bonuses and rates are dropped down by uber, the drivers will quit.
     
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