Uber’s plummeting revenues in China have forced a raging discussion on this topic. The fact that Uber is incurring heavy losses in China is not unknown to anyone. The exact amount of loss is not yet determined. In a recent interaction with the press, Uber CEO Travis Kalanick indicated that Uber was bearing annual losses amounting up to almost $1 billion.

Why the Loss…

  • Travis said that the company is flourishing in the USA but losing such massive amounts in China.
  • The prime reason for Uber chinasuch losses has been credited to a formidable competitor or as the CEO named it- “a fierce competitor”.
  • The competitor of Uber is said to be DidiKuaidi, which is the leading taxi service firm in China.
  • Both the firms have been embroiled in a funding tussle and situations have worsened over the last few months.
  • DidiKuaidi estimated its market value at $16.5 billion after earning $3 billion in September.
  • The China unit of Uber shut the series B round somewhere around last month. The exact details of size and value were not furbished anywhere.

Explanations…

  • Travis Kalanick pointed out that the competitor doesn’t drag them down due to performance but due to market share.
  • The Uber CEO expressed dissent against fundraising for market share and voiced support for building a business.
  • On the contrary, Travis also said that this can be detrimental to the company’s interest since other competitors will not stop at anything to bring Uber down.
  • There are no exact inferences concerning the lead DidiKuaidi has over Uber regarding market share.
  • Still Uber lagged behind DidiKuaidi by a huge margin in the month of August.

Remedial Measures…

  • Presently, Uber CEO Travis Kalanick has declared the company’s expansion in China as the topmost priority for the organization.
  • If we state the CEO precisely, then the expansion in China is Uber’s ‘top global priority.’
  • The prime factor driving this initiative is the presence of densely populated cities in the oriental kingdom.
  • Among other factors, the impermeable nature of the Chinese market draws major attention. China’s market and relevant policies, as well as regulations, do not favor induction of foreign internet companies.
  • So Uber has decided to continue its business in China despite the alarming burn rate.

Despite the consistent efforts to outrival DidiKuaidi, it is good to know that the company can derive a lot from the Chinese market despite being a runner-up in the competition.