Everybody knows that Uber is expanding globally. While some countries are easy to enter and control, there are some markets that Uber are having great trouble.
In Japan, after the government prohibited Uber’s taxi service, Uber tried to work as an entrance of stream and transfer customers to local taxi companies, but with the highly developed transportation system in Japan, such role was not really needed. Thus the main product now for Uber Japan is called UberEats, which is a food delivery service. At the moment, their expectation is optimal, and we will see what happens in the future.
In China, the war among taxi service apps had lasted for 2 years. More than 30 companies had been merged by two, named KauiDi and DiDi, and DiDi merged the other one in Feb 2015, before Uber came into the game.
A new capital war then started between DiDi and Uber. They both has significant discount policy for customers, and bonus revenue for drivers. This sounds easy but it’s no different from burning the money. According to Travis Kalanick, the CEO of Uber, DiDi had spent 4 billion dollars within 1 year. Alhough Uber did the same thing, its market share don’t grow as expected. It possesses 10.9% of the market at the start of 2016. Eventually, DiDi merged Uber China during summer 2016. Before Uber decided to give up the Chinese market, it planed to expand UberEats to China, as well as an delivery service called UberCargo. However, these stories all ended with the merger.
Source: http://business.sohu.com/20160929/n469373223.shtml?_t_t_t=0.6728239609479221
http://news.xinhuanet.com/tech/2016-03/03/c_128770612.htm
I think the of acquisition by Didi technology is a typical case for most international company to analyze if they are ambitious to enter Chinese market. I could not agree more about the success that Uber made in China. They promote the competition in mobile taxi industry and they force DiDi and KuaiDi to merge to compete with Uber. However, the final winner in this field is DiDi, the domestic company rather than the global brand.
Personally, there are many reasons that it is a corollary for Uber to be acquired by Didi. The main reason is the strategy adjustment of money. If investor are disappointed to the company, then change will definitely happen. The ultimate goal for investment is to spend the minimum and obtain maximum return. Baidu spends 1.2 billion to Uber to compete with Alibaba and Tencent which invest Didi. As the customer of BAT, I really enjoyed the price war between each other because the price to call Uber or Didi was really cheap. In contract, if I am the shareholder, I would be really concerned about current situation. Both side of investors are just burning money to fight for the subscribers, which is not healthy for the industry development. That is why they have to merge to end this crazy competition.
Source from: http://www.cnbc.com/2014/12/17/chinas-baidu-confirms-investment-in-online-taxi-service-uber.html
I am not so sure I take such a rosy view of Uber’s plight in China. I think they are symptomatic of deeper-seated global strategy problems and that they reveal some serious strategic flaws. When companies expand abroad, they face unfamiliar cultural, political, and economic environments that put additional, unforeseen pressures on their domestic business models. They also face competitors who understand the local environment far better than they do. No technology company has experienced these difficulties more acutely than Uber. In fewer than seven years, Uber has managed to expand from North America to every populated continent – Europe, Asia, South America, Africa, and Australia. At one point Uber was entering one new city per day. And if that weren’t enough, Uber recently expanded its offerings in markets like Thailand and India with a rickshaw and motorbike service. That kind of growth in product and geographic scope is unprecedented. But Uber has not been so lucky outside the US. Beyond its well-documented troubles in China, it is also struggling in Europe. The young tech company has committed a classic globalization mistake: it naively assumed that its business model and market approach, which ultimately solidified its market-leading position in the U.S., could translate just as seamlessly to other countries. It severely underestimated the challenges of operating in countries that embody totally different economic, political, and cultural environments.
http://fortune.com/2016/03/07/uber-china-2/
I think it is smart that Uber is expanding into international markets. It is interesting that places in East Asia don’t necessarily have a need for the app. They either already have a service similar to that, or the market is over saturated. Obviously in North America, people love Uber and its quality services, and our public transportation is lacking in a lot of areas. As you mentioned countries in Asia already have great public transportation, so I will be interested to see how Ubereats works out in Japan. It is convenient that Uber can adapt the app to meet the needs of the market rather than having to exit the market or merge. It is intriguing that as Americans we are obsessed with Uber, but others have never heard of an Uber. Perhaps it is a marketing problem or cultural difference.
Uber might be really famous app in North American region of the world. However, there are a lot of countries where they do not even know what an Uber is. However, the Uber company tries their best to expand their company into different regions of the world and the result was usually bad. Uber also tried to make progress in Korea, but they failed. According to Kia Kokalitcheva’s article, “Although Uber seems to finally be making progress in Korea, it still remains to be seen if it will be able to make up for lost time.” Also, the aricle says that “Kakao, the parent company of Korea’s most popular messaging app, introduced KakaoTaxi and it received more than 1.2 million ride requests in the first four months.” In my opinion, it is almost impossible for Uber to success and make profits in East Asia region because those regions are developed in technology and regions where a lot of people in the country favor to use the app from their countries.
Reference:
http://fortune.com/2015/11/11/uber-south-korea/