I'm afraid this is a fight Uber won't win. I just can't see the Chinese internet giants letting an American company dominate this space. Call me jaded, but the world isn't so black and white, and I'm sure in the end Uber will concede to defeat after realizing their biggest competitor aren't playing by the same rules.
It's not jaded, it's an accurate understanding of China's historically mercantile attitude.
I cannot for the life of me think of a single foreign product or company operating in China that China hasn't copied for their own version (or ripped off, like the fake Apple stores). The only exceptions are culture companies, where the brand matters more than the product (Pizza Hut; McDonalds; Starbucks).
Microsoft, Intel and Apple seems to do well, just on top of my head, many car companies are also doing well, although German and Japanese cars sell better than American ones.
After some googling, looks like Nike, Coca-cola, Gillette are all doing reasonably well.
Microsoft, Intel, and apple all have irreplaceable products (custom OS, etc).
What does Uber have besides boatloads of cash and existing market share? From s consumer perspective Uber's competition works just as well (for the most part), whereas alternatives to windows are Limited to MacOS, Linux.
>Nike
Great brand of shoes. "Just do it"! More than just the thing you run in.
>Coca-cola
The classic soda. Even Pepsi's cutesy challenge barely wobbled Coke's throne.
>Gillette
"The best a man can get!" Lovely brand. Before I moved to DSC I used them all the time. But razors are just strips of metal after all.
Basically my point is with enough capital and know-how, anyone can create anything. But without an effective and compelling brand, you're a nobody.
China makes quality hardware these days (Xiaomi for example), but "cheap Chinese crap" is such an entrenched phrase it practically rolls off the tongue.
Parent comment meant Microsoft's revenue in China. While exact figures are hard to come by, they most certainly do not make tens of billions of dollars from China.
Not necessarily true, just look at soccer in China in the past two weeks. Just buy all the Lebron's until you figure out the template and can mass produce it.
They can't buy all the Lebrons. They don't want to play in China. During the last NBA strike problems, the same held true: nobody of consequence abandoned ship, they chose to wait it out.
The ~450 NBA players are set to make more than all the Fortune 500 CEOs combined in salary terms, with the new TV rights. China currently can't replicate everything that goes into paying for that (we're talking about $35 billion in salary in just the next 10 years). Buying a few star players won't elevate the overall league, it'll make the league a joke.
China has an economy that is about to be half the size of the US as they are forced to significantly devalue the yuan in the next 12-18 months, and their economy is sinking under a massive and perpetually expanding load of debt. They can't afford to play the game the way they used to, where they'd foolishly pay N times what something is worth just to make it happen. Those days are over, economic normalization is inbound (if they're lucky).
The CSL isn't buying the Lebrons of soccer, though.
Edit to add: And there's more to a successful and interesting league than recognizable players; moreso in soccer than basketball (and even moreso in American football).
Uber already knows this. That's why they've partnered with Baidu and raised $2B from Chinese investors recently.
You really think Travis is going to lose in China? This isn't Google China in 2009. Travis partnered with the crazy guy who got Google kicked out of China.
I won't speculate that Uber will be dominate in China but there's no way they're going away anytime soon.
> You really think Travis is going to lose in China? This isn't Google China in 2009. Travis partnered with the crazy guy who got Google kicked out of China.
You really think the Chinese government is going to hand over the country's taxi market to a foreign led/managed/owned company? LOL
The fact that you are comparing Travis to the CCP in the same sentence is laughable, as if he has some magical power that will allow him to defy papa Xi in his own country!
China is merely allowing Uber to experiment and establish the concept of ride-sharing in China. Once that happens they will steamroll them over using every trick in the book, including ironically, lots of regulation!
Sure why not? Microsoft is the leading computer operating system in China. Android and iOS are the top mobile operating systems. All are U.S. led/managed/owned companies.
To address your second point about regulation, Didi Kuaidi doesn't escape regulation any more than Uber does.
Uber raised $2B from Chinese investors and is partnered with Baidu. I never said Uber will win the taxi market in China, because that's incredibly hard, but to "LOL" and call my statement "laughable" I believe is a little off considering their strategy.
It's laughable not because of "their strategy", but because your statement displays a lack of understanding (complete imo) about how business is done (and has always been done) in China. It is a very naive view, made especially so by your "do you really think Travis would _allow_ ..." as if Travis has ANY control in China.
MS, Android, etc. those are outliers and every story has one. The reality is, the vast majority of foreign companies looking to dominate Chinese market share have met their demise.
I would say _especially_ so for companies that are displacing local operators.
Just think how mad the US taxi industry is about Uber. Now imagine if Uber is owned/operated by Jose in Mexico City. You think our politicians wouldn't regulate the hell out of it? You expect less from the Chinese?
In regards to Didi Kuaidi. Sure they'll be regulated too, but when it comes down to the wire who do you think the government will side with?
I agree to disagree. It's impossible to predict the future but if I was forecasting Uber's future in China, I believe they have a good chance of succeeding. That's just my opinion.
I respect that you have a different opinion but you shouldn't assume so easily.
I recently worked for a Chinese software company for over three years. I helped them IPO in China last year before the Chinese stock market collapsed. I know how hard it is to breakthrough in China because my last company had more success in North America and EMEA than APAC. Chinese regulation is hard but I'll side with Uber any day because I believe in Travis and his team, even if you don't.
> I respect that you have a different opinion but you shouldn't assume so easily.
You are assuming my opinion is easily formed, when it is based off of lots of experience in China and discussions with a wide network of people with even more experience in China.
Uber may succeed in China, but it will be at the blessing of the CCP (another HN commentator raises one possibility: if Chinese investors own a majority of the company). To think "Travis and his team" have any real control in China is - no offense - totally naive.
I think your view is naive because you think Travis and his "strategy" have any bearing on Uber's long-term success in China.
The only strategy that matters is how to curry favor with, and kowtow to, the Chinese leadership and central to that strategy, unfortunately, is not being majority foreign owned/operated (especially by Americans).
> My statements aren't "laughable" or "totally naive." You just want to be right huh?
Now you're just projecting.
Your view is in the minority, even here on HN. If you were to take this view to more China-centric online communities, you'll find even fewer supporters.
"Laughable" is mean-spirited, but "naive" is a fitting description.
I'm not projecting. You just think you're right because you're Chinese.
You know honestly I didn't have an issue with your feedback except that you overreached when you said my comments were "LOL", "naive" and "laughable." That's offensive and arrogant. But you don't stop there, you keep attacking me!
"Your view is in the minority, even here on HN. If you were to take this view to more China-centric online communities, you'll find even fewer supporters."
You don't think I have Chinese friends? You're assuming once again.
And my view is the minority according to YOU! You don't have census data of the world, just your network, so stop attacking every response I have to prove your point!
Wait five years and we'll see who's right about Uber in China. You don't need to keep attacking me every time. It's rude.
Xiaomi employs Hugo barras, former head of android. China has the source code to Windows (not sure if current versions). And on top of all that no Chinese person uses googles ecosystem on android and they cannot use many of iOS features like Apple Pay. They jailbreak and side load apps.
For Chinese (and Indian) economies, the recent VC boom has been a significant conduit to siphon foreign dollars directly into consumer economies. The govt's have mostly kept a handsoff approach as long it's basically acting as a consumer economy stimulus funded by the VC. If any of these businesses become significant profit drivers, you can bet your last dime that local competition will find ways win those markets using whatever means necessary (more easily in China than India... but still).
> You really think Travis is going to lose in China? This isn't Google China in 2009. Travis partnered with the crazy guy who got Google kicked out of China.
Yea, probably. He's done pretty well in most markets, but China isn't most markets.
Yes they can partner with Baidu but at the end of the day, its all about whether the CCP have Uber on a leash. If the CCP can force Walmart to capitulate and accept unions then I'm sure Uber will capitulate as well and change their core values or possibly even control and influence to the CCP via a board member.
I agree that Uber isn't going to lose outright with how they intend to fight in China and I'm actually excited to see how much Uber will change to become CCP acceptable. If Uber wants to win, it will have to sacrifice a lot more than just money.
> Call me jaded, but the world isn't so black and white, and I'm sure in the end Uber will concede to defeat after realizing their biggest competitor aren't playing by the same rules.
Call me a jaded person, but Uber shall have learned a lesson.
When they break the law, its distrupty, when someone else does it, its "unfair".
That would seem to be the default outcome, based on experiences of other American companies in China. It still makes sense for Uber to fight for their place in China, though. The opportunity is too big to just concede defeat. Uber are also probably a bit more street smart than the other American internet companies that have previously failed to establish their place in China.
American tech companies didn't fail to dominate China because of naïveté, they failed because the Chinese Communist Party refuses to let any global tech company establish a sizable foothold when they can create their own Chinese version, especially when the Chinese version helps cement the Great Firewall and control the populace. This is not a contemporary trend, this is the consistent history of China.
Baidu over Google; Alibaba over Amazon; Renren over Facebook and Twitter (both blocked in China).
Only exception is Apple, but they mostly sell products instead of info (and is fashionable among the Chinese elite). But then, there's always Xiaomi...
US company views China a good to have, but not live or death market. Native Chinese company does not. it's the vital difference that matters.
Take Google for example. will it break the copyright law to provide MP3 download for its own survival in USA? I bet yes. But in China, it won't. It's not an issue of morality, or suppression of Chinese Community Party.
Amazon VS. Alibaba. Jack Ma personally visited clients to seal deals, would Jeff Bezos do the same to his Chinese clients? I don't think so.
MSN VS. QQ. In 2005/6, 10m+ Chinese MSN users were assaulted by a social engineering hack. It only took 6 months for MS to recognised the issue. Tencent normally reacts in 48 hours.
Twitter VS. Sina Weibo. When Sina decided to do Weibo, it was a full scale operation with so many functions Chinese users loved that even if Twitter was allowed in Chinese market, it would lose in weeks.
when you are playing a market game in China, facing competitors whose lives are in stake, the result is obvious. Your competitors would do anything to survive, including breaking laws, lobbying/bribing govt./officers.
You are dead right. Bribes that are simply a part of the game in China are a punishable offence in the West.
Another reason foreign social networks tend to be blocked in China: if someone makes a post on Weibo or Renren that the party doesn't like, they can simply have it removed without fanfare...along with the poster...
My point is less about bribe or lobbying. It's about the mentality. For native Chinese company, the stake is so high that when facing overwhelmingly foreign opportunists they are willing to do anything to survive, faster reaction to users/customers, product adjustment to local users, more marketing spending, wage PR war with naive nationalism, you name it. Bribing and politics are really tip of the iceberg.
Global(US) company cant survive in China, a major reason is that their services are not competitive enough(although a few exceptions, e.g. Google Search), comparing to local rivals.
Amazon, for example, their delivery is not working in China. Competitors are offering same-day delivery, or even 3-hour delivery one or two years ago in China, while Amazon is relying on some crappy 3rd party delivery with a high deductible you have to meet before your delivery can be free.
Wechat centers around chatting as a take on SNS, and it works. It is not Facebook, but works like Facebook. While the direct copy of Facbook, Renren is long dying.
So it is really a grey area when we talking about success in China. What you need to realize, Chinese companies are very competitive. Shit tons of money pours to Chinese internet companies over the past decade. Tencent/Alibaba are all 100 billions company, and there are sizable of others worth more than 10 billions. Also, China has good engineers too, might not live up to bay area standard, but they are also much cheaper. Last but not least, I want to point out, a lot of 'tech' companies here are not really tech driven, rather they are just tech users, so their model can be easily copied and recreated, not only in China, but also by other big US companies.
All in all, it is not realistic to expect what work here automatically print money in China. South korea is an interesting example, where GFW doesn't exist, but US companies also have a hard time there, it is just that China is bigger so it gets much more attention.
I'm guessing you're just a year too young to remember Google having to pull out of China (and various similar US website forced out of China disasters about the same time) that the CCP pulled to give their home growns the big edge.
Claiming the domestic market is better because the CCP basically forced all the competition out by quite publicly asking them all to spy on the chinese citizens, politically unfeasible at the time for the US companies, is not that they 'are not competitive enough'.
It's Chinese protectionism and desire for central control.
I honestly feel like you're trying to rewrite what is very well documented history and very recent history at that. It was widely discussed here at the time.
I do agree Google and FB is largely harmed by the great firewall from the every beginning, they don't even have a chance to compete. But Uber is not really blocked in China at all. They worked really actively with their government and even throw in a DC in China. Yes, Uber's competitor is fierce, but they made it work. Unlike the fact that China still cannot make a smart phone as good as iPhone, or cannot make their own OS like windows, that's they Apple and MS thrived.
> But Uber is not really blocked in China at all. They worked really actively with their government and even throw in a DC in China.
Uber is not blocked, for now. That can change in a whim. The Chinese government can simply create regulations that apply to them that do not apply to their local competitors. This has happened many times before in the past....
>Unlike the fact that China still cannot make a smart phone as good as iPhone, or cannot make their own OS like windows, that's they Apple and MS thrived.
While the Chinese did not design the iPhone to say that they "cannot make a smart phone as good" is completely false. For one, the iPhone is largely manufactured in China and has been for a few generations now. Second, some of the best iphone competitors / android devices are being made by Chinese companies.
>Second, some of the best iphone competitors / android devices are being made by Chinese companies.
Such as? Even if true they are running non-chinese OS software...
Making the iPhone in China means they could make iPhones, not necessarily that they can design and build their own full stack phone without "borrowing" heavily from foreign cpetitors.
> Such as? Even if true they are running non-chinese OS software...
Huawei M8 is nice and well made.
> Making the iPhone in China means they could make iPhones, not necessarily that they can design and build their own full stack phone without "borrowing" heavily from foreign cpetitors.
I generally agree with this, but you may be underestimating how quickly others can catch up in this globalized world.
Plus the blueprint has been well established by the other big Asian tech companies. Look at how quickly Samsung "caught up".
They were naive in thinking they could play in China without being buddies with the government. If any company has become expert about government relations recently, it's Uber.
There is nothing special or unique about Uber. Yes, their app is pretty. Yes, they are ubiquitous around the world. But there is nothing about it that cannot be copied by a Chinese state-owned enterprise. One could argue Uber's only major advantage is its waterfall of investors.
Uber's most significant long tail value is their heaps of traffic flow and passenger data. Sounds like the exact kind of thing a rich and historically totalitarian regime would want for themselves. And if you want to spot patterns in a potential dissident, it helps to know where they go.
More riders = more drivers. More drivers = more riders opening that app first. I have personally learned to check Uber first before Lyft because I know Uber drivers are closer and the fare estimate will be lower. Uber's advantage is their institutional experience pushing competitors out of markets they want and their cutthroat attitude.
In the cities (Denver, Austin, Portland, Las Vegas...) I've been spending time in recently I've felt like the opposite. Lyft seems to have more drivers and Lyft is almost always cheaper. I've been told by drivers that they try to drive for Lyft as much as possible as they get a bigger cut of the fare, but I have no idea if that's true.
The opportunity is only as big as the Chinese government will allow. If Uber didn't learn that lesson it soon will, and it will have cost them $1 Billion+
The Chinese market was also big for Google, but once the government makes a decision, that "market" will either infect you (ie obligate you to follow Chinese government rules when it comes to your operations outside of China as well) or make you re-evaluate why you want to be in China at all. Google pulled out. The market isn't as big as people think because it's not actually a market.
Indeed; it all hinges whether they can get the government to accept them. I have a feeling Uber won't be quite as idealistic or principled as Google were.
> I just can't see the Chinese internet giants letting an American company dominate this space
Letting an American company know who in your country is travelling where and meeting with whom for how long would be a risky national-security move even without the FBI and pals advertising their bulldog mentality.
Uber runs on cellphone GPS alone. The gov't has full access to cell phone location records for everyone who touches their cell network, with unique serial numbers. They don't need uber or anyone else for a subset of their location records.
The argument isn't that the government needs Uber to be able to track their citizens, but that Uber being a major player allows the American government to track Chinese citizens.
Economic colonialism, i.e. the old boys imposing their will on the new boys, that's it. Case in point, that UAE company which was not allowed to purchase the management contract for some ports in the USA (https://en.wikipedia.org/wiki/Dubai_Ports_World_controversy), the US air business market that only allows American-owned companies, or any big acquisition involving Chinese money on American soil, which automatically creates a "strategic/national defense" discussion.
