Uber in China: the entry of a global new economy into the Chinese market

Abstract

Uber is one of the most successful yet controversial startups of the twenty-first century. It was pioneer in the launch of online ride-sharing services and became a symbol of the sharing economy. Throughout its relatively brief history, the startup was able to build a network of riders and drivers of millions of people around the world, reaching a whopping 70 billion dollars evaluation. Despite previous failures by major US companies to penetrate the Chinese market, Uber appeared to be determined to conquer the world’s second largest economy. The result was a fierce battle with Chinese competitor Didi Chuxing, which lasted nearly two years and costed both parties millions of dollars. Faced with a conflict that could have lasted for the foreseeable future, the two companies decided to partner and Didi acquired all Uber China operations in exchange of around 18% of its stakes. The outcome was a strong market concentration, with Didi now controlling almost 95% of the local market. The aim of this dissertation is to examine the diffusion of online ride-sharing in China, starting from the arrival of Uber on Chinese soil. After a presentation of Uber’s history and business model, the focus will be shifted on the steps that brought the company into the Chinese market, with emphasis given to the battle against its main rival Didi. It will be then highlighted the central role played by Chinese government, active in the regulation of online ride-sharing business and keen towards innovation. To conclude, the consequences of Uber’s deal with Didi will be set out and analyzed. This merger raised competition concerns, and is now under investigation of the Chinese Ministry of commerce, accusing the two companies of violating the country’s antitrust law.