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    Uber in China: Driving in The Gray Zone: HBS Case Discussion

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    Shiva Beduduri
    This document discusses the challenges Uber faced entering the Chinese market. [1] It provides learning outcomes on understanding challenges in foreign markets and China specifically. [2] It outlines Uber's global expansion and challenges facing regulation globally. [3] In China, Uber faced strong competition from Didi Kuaidi, regulatory hurdles, and an initial lack of integration with Chinese payment and mapping systems. [4] To overcome challenges, Uber localized operations, partnered with local players, and continues investing despite losses to establish a long term presence. [5] Other companies can learn from Uber's experience adapting to local conditions in foreign expansion.

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    Uber in China: Driving in The Gray Zone: HBS Case Discussion

    Uploaded by

    Shiva Beduduri
    438 views11 pages
    This document discusses the challenges Uber faced entering the Chinese market. [1] It provides learning outcomes on understanding challenges in foreign markets and China specifically. [2] It outlines Uber's global expansion and challenges facing regulation globally. [3] In China, Uber faced strong competition from Didi Kuaidi, regulatory hurdles, and an initial lack of integration with Chinese payment and mapping systems. [4] To overcome challenges, Uber localized operations, partnered with local players, and continues investing despite losses to establish a long term presence. [5] Other companies can learn from Uber's experience adapting to local conditions in foreign expansion.

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    Case_3_Uber_1585463506909.pptx

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    This document discusses the challenges Uber faced entering the Chinese market. [1] It provides learning outcomes on understanding challenges in foreign markets and China specifically. [2] It outlines Uber's global expansion and challenges facing regulation globally. [3] In China, Uber faced strong competition from Didi Kuaidi, regulatory hurdles, and an initial lack of integration with Chinese payment and mapping systems. [4] To overcome challenges, Uber localized operations, partnered with local players, and continues investing despite losses to establish a long term presence. [5] Other companies can learn from Uber's experience adapting to local conditions in foreign expansion.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    438 views11 pages

    Uber in China: Driving in The Gray Zone: HBS Case Discussion

    Uploaded by

    Shiva Beduduri
    This document discusses the challenges Uber faced entering the Chinese market. [1] It provides learning outcomes on understanding challenges in foreign markets and China specifically. [2] It outlines Uber's global expansion and challenges facing regulation globally. [3] In China, Uber faced strong competition from Didi Kuaidi, regulatory hurdles, and an initial lack of integration with Chinese payment and mapping systems. [4] To overcome challenges, Uber localized operations, partnered with local players, and continues investing despite losses to establish a long term presence. [5] Other companies can learn from Uber's experience adapting to local conditions in foreign expansion.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    HBS Case Discussion

    Uber in China: Driving in the Gray Zone

    06/28/2020 Merged MMZG611 1


    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Discussion Points
    1. Why did Uber decide to enter the Chinese market?
    2. What are the challenges that Uber faced globally?
    3. What are the challenges that Uber faced in China?
    4. What strategies has Uber employed to overcome the market-
    specific challenges in China?
    5. What lessons can Uber teach other foreign companies?

    06/28/2020 Merged MMZG611 2


    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Learning Outcome

    • To understand challenges of doing business in foreign


    companies;
    • To understand doing business in China;
    • To understand dynamics of local and non-local companies

    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956


    Uber
    • Founded in 2009 , with rapid subsequent
    global expansion.
    • It was one of the first ride-hailing service
    provider.
    • It started disrupting what is a highly
    regulated industry in many countries.
    • It is facing legal hurdles in many of the
    consumer markets for varied reasons.
    • Despite its challenges it has been valued
    around $60 billion by investors.

    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956


    Why China?
    • 800-million person urban transportation market.
    • Strong customer base of 900 million smart phone
    users.
    • Even before Uber’s expansion in China there were
    already 18 million taxi app users.
    • Inadequate transportation options for a growing
    urban population has led to high customer
    demand.
    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Uber: US V/S Chinese Market
    • Similarities:
    – Inadequate transportation options (Positive)
    – Strong customer base of smartphone users (Positive)
    – Entrenched taxi industry with heavy lobbying power (Negative)
    • Differences:
    – DDKD, a hugely strong local competitor (Negative)
    – Lack of credit card use meant that Uber needed to integrate a new payment system
    (Negative)
    – Government has unusually strong regulatory capacity (Negative)
    – Government control of internet necessitated change of the core Uber product (Negative)
    – Huge number of large urban areas (Positive)
    – Partnership with Baidu Maps allowed it to connect with one of the three most powerful
    players in internet-technology sector in China (Positive)
    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Challenges in China
    • Strong government regulatory capacity.
    – Dearth of laws addressing services like Uber and an opaque
    lawmaking process.
    • Lack of credit card users.
    – No credit rating system makes credit card issuance risky and
    difficult.
    • Initial mapping system was problematic as Google Maps is
    banned in China.
    – Uber partnered with Baidu Maps and integrated their systems with
    it.
    • Fraud: Large amount of subsidies are offered to drivers in
    order to attract them to the Uber platform, drivers have
    come up with very creative ways to defraud Uber.
    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Challenges in China cont.
    • A hugely strong local competitor in Didi-Kuaidi (DDKD).
    – Didi Dache, backed by Chinese Internet giant Tencent
    Holdings Limited and Kuaidi Dache, backed by Alibaba
    Group started out as two separate taxi-hailing services
    that later merged in 2015.
    – Didi-Kuaidi has a huge market share (around 80%).
    – Offers diversified services including bus services as well.
    – DDKD received first special license from Shanghai Govt.
    to legalize their operations in municipality;
    – Didi-Kuaidi has started expanding into Uber markets also.
    Partnered with Lyft in US, invested in GrabTaxi (an Uber
    competitor in Southeast Asia) and Ola (Uber’s main
    competition in India). BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    Strategies that Uber employing in China
    • Uber set up a new corporate entity, Shanghai Wubo, registered in Shanghai
    Trade Free Zone.
    • Set-up its first non-U.S.-based data center in Wuhan and attempted to localize
    not just the product but the operations as well by working with sub-national
    or even sub-provincial governments.
    • Partnered with local players, such as Guangzhou Automobile Group and HNA.
    • It continues to invest money even though it is making losses believing that
    Uber is in China for the long haul.
    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
    What lessons can Uber teach to other
    companies?

    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956


    Please note-Case discussion is solely for understanding and
    applying theoretical frameworks for class learning; this can not
    be used as a source of endorsement, sources of primary data,
    and illustration of effective or ineffective management

    Sharing or Posting these slides is strictly prohibited

    11
    BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956

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