Leak reveals $1bn Uber investment in China
Fri 12 Jun 2015
Uber is planning to invest over $1 billion (approx. £650mn) in its Chinese business this year, a leaked letter to investors has confirmed.
The ride-hailing app has said that cracking China is its ‘number one priority’ – a challenging market for most Western-based technology markets. Uber itself has struggled recently to compete with domestic rivals such as Didi Kuaidi who dominates the industry with 78% of all ride bookings. Uber currently trails with 11%.
However a letter penned by Uber CEO Travis Kalanick has underlined the importance of the world’s second largest economy to the company’s future growth. Kalanick urged investors to drive fresh funding for Uber’s Chinese operations to be able to better compete with the Tencent and Alibaba-backed Didi Kuaidi.
Kalanick also criticised Didi Kuaidi’s move into the wider transport sector. “One competitor has cloned our core product line and is attempting to transition from its legacy taxi business to a similar P2P model,” wrote the CEO.
To boost its efforts in China, Uber teamed up with Chinese web provider Baidu in December. The collaboration includes linking up mapping technologies and payment platforms. Uber has also partnered with other domestic tech firms, financial services, and insurance groups who are investing more than $500 million in the company between them.
The call to investors follows reports this week that Chinese Uber drivers are involved in conning the system. State-run Chinese news site The Paper [Chinese] reported that some Uber drivers were using social media platform WeChat to find accomplices to help them book fraudulent rides.
The fraudster is able to stay at home, disable their smartphones’ location settings, and select a pickup spot close to the location of the driver’s vehicle. The driver then accepts the ride and goes on a drive without the passenger. The accomplice processes a payment and the driver pays back the fee and shares in the bonus. Uber has said that it is investigating the issue and using “deep analytics” to combat the fraud.
UberChina is set to kick off a formal fundraising programme from the 22nd June.