Key get into a strategic partnership with

Key Issues

Intense Local Competition

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Local
competition was so intense that Uber had to spend big to attract customers and
drivers to make the product more striking to the Chinese customers. Didi Dache
and Kuadi Dache had also got into a partnership to counter Uber. Uber was
competing solely on price and subsidies. As a result, it was gaining more
passengers but eventually losing money. Usually Uber takes a 25% cut of the
fare and passes the rest to the driver. But in China, Uber pays drivers a
multiple of the passenger’s fare. By doing this Uber loses a lot of money.
Interestingly, Didi follows a similar payment process

Uber was unable to influence
regulation

By
going for the mass market to reach higher valuations Uber was bound to be subjected
to Government regulations. By capping prices and restricting
supply, the government has rationed taxi services. Local governments could issue drivers licenses to determine
what kind of cars can be driven and who would be eligible to be a driver

Local Market Issues

·       
Technological

Google
Maps, which Uber uses to locate drivers and riders, is blocked in China,
forcing the company to redesign its software. Uber had to get into a strategic
partnership with Baidu in December 2014.

Customers
in China had to verify their credit card information before opening an Uber
account. This was a major hassle for many potential Chinese users. Uber China was
able to rectify this problem by adding the option of payment through Alipay (Kirby, 2016)

Uber
China had to install servers in China to prevent its operations from getting
interrupted while passing over the Chinese firewall. (Kirby, 2016)

·       
Fraud

Fraud
is one of the major issues that Uber faces in China. Drivers create fake rides
and claim bonuses. About 3% of the rides were fraudulent in the summer of 2015.
Uber had to spend of time and money to control fraud. Steps have been taken to
implement additional identity verification and reduce the subsidies and bonuses
to discourage fraud. (Kirby, 2016)

·       
Resistance from taxi
industry

Thousands
of taxi drivers have been going on strike to protest against taxi hailing
services such as Uber and other local taxi hailing services. The government has
been cracking down on these taxi hailing services to protect the traditional
taxi industry. (Quartz, 2015)