Uber’s U-turn in China: The Real Lesson
In her recent post, Kitty Fok, Managing Director of IDC China, shares a broader view on Uber’s recent decision to sell its China business to its Chinese rival Didi.
Kitty’s key points include:
- The argument that the Uber-Didi deal simply shows that the China market is stacked against Western tech companies misses a broader point.
- Beyond alarming headlines like “How Uber Crashed,” a rather different reality emerges. Didi offered more and much better features based on their deeper knowledge of the Chinese market compared to Uber, who despite spending over a billion dollars to prop up its position in the country, was left far behind.
- The upshot of the Uber-Didi deal is that Uber now has a $7 billion dollar stake share in Didi’s dynamically growing business – not a bad result given its estimated $2 billion Uber investment in China. Its costly price war with Didi is over, and Uber is now well positioned both to acquire a much more sophisticated understanding of the China market and to devote resources to expanding in other parts of the world.
- The moral of this story is not, as some headlines screamed, “Uber Forced Out of China,” but rather that everything in China is more complicated and less ‘black and white’ as it often appears to be the case. One can argue that under the circumstances, Uber’s decision to sell is better understood not as a defeat but a strategic retreat – a smart move that will allow it to maintain a presence and develop a better understanding of China, while simultaneously freeing itself to expand in other countries.
- China is still going to want- and need- the involvement of international tech companies. Western firms who understand this, and can make in-depth localization, will find there are still major opportunities in China.
Click here for Kitty’s full post on this topic and engage with her by sharing your insights, comments and questions. You can also follow Kitty Fok at:
– Twitter (@kittyfok)
If quoting from this article, please use Kitty Fok’s full name and title.
Stay tuned for more insights on the China market from Kitty Fok!