Uber China: Integrated Customer Experience and Market Analysis Report

This report provides a comprehensive analysis of Uber's experience in the Chinese market. It begins by examining the attractiveness of the Chinese market to Uber, highlighting factors such as the large urban commuter population and low car ownership. The report then delves into the market forces that Uber failed to anticipate, including the dominance of Didi Chuxing and the importance of local partnerships. The analysis further explores the positioning and customer acquisition strategies Uber could have pursued, such as focusing on customer service, adapting to the local payment culture, and collaborating with local taxi providers. The report utilizes a 5 Whys analysis to identify the root causes of Uber's challenges, concluding that the company's inability to connect with the local culture and form strong local partnerships contributed significantly to its failure. Finally, the report references several sources to support its findings.

Integrated Business Experience
Short question and Answers
Uber China

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Table of Content
Question 1: What made the Chinese market attractive to Uber? Do you believe that
Uber can succeed in the Chinese Market?..................................................................2
Question 2: What market forces did Uber China fail to identify, underestimate or
consider in relation to its market entry?........................................................................2
Question 3: What positioning and customer acquisition program the company could
have pursued? Do you believe that Uber could have succeeded? Why?...................3
References...................................................................................................................6

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Question 1: What made the Chinese market attractive to Uber? Do you believe
that Uber can succeed in the Chinese Market?
China had almost 750 million urban commuters which made it the largest consumer
market in the world, roughly 5 times that of the size of the 150 million US commuter
market. At the same time, Chinese car ownership was extremely low; it had 69 cars
for 1000 people. Moreover there was a short supply of taxi services in China and low
fares were paid to the taxi drivers. Adding to the agony, the entire population relied
heavily on buses, metro and other such means of transport for commuting. All these
features made the market extremely attractive for Uber to foray in the Chinese
market. As the market held limitless opportunity to gain riders and offer ride sharing
and online Chauffeuring service to the commuters. Uber then finally launched in the
year 2013 with Uber Black, the company did not achieve much success initially
because people perceived that the fares were too high. Therefore when the
company moved to other cities it went forward with Uber X, the low cost ride
services. Uber also launched the service Uber people to penetrate in the market; it
was not for profit ride hailing services with the fare being calculated according to the
ownership and the operating cost of the vehicles. The company at the same time
spent around $ 2 Billion towards the promotion and it benefited all the stakeholders
(Uber, drivers & riders). In the bid to dominate the market, company faced stiff
competition from Didi Chuxing and Yideo, and by 2015 the company had a total
market capitalization worth $ 8 billion. At last in the year 2016 Uber in a share swap
deal sold its business and operation to Didi. The move was right as it was really
difficult for Uber to keep on competing in a price sensitive market with deep pocket
players. The company did everything to capture the market; however its positioning
flaw led company to sell off its business.
Question 2: What market forces did Uber China fail to identify, underestimate
or consider in relation to its market entry?
Uber entered the Chinese market in the year 2013; a year after DIdi entered the
market. The company went with the vision to apply the model which made it highly
successful in the US market. However the company did not anticipate the challenges

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in doing so and hence had to sell off its business in the year 2016 to Didi. Company
failed to perform at many front; the first one being the company’s first offering to the
Chinese market was Uber Black. Uber Black in itself was an expensive service and
because of the model the fare exceeded the prevalent taxi fares (Rivas, 2017)
Another factor which the company failed to comprehend was the market dominance
of Didi and Yidao; these two players had a market capitalization of over 89 percent
and also had created a strong brand identity for itself. At the time Uber reached a
market valuation of $ 8 billion, Didi had already captured 10 million trips per days
and boosted revenue of $ 36 Billion. Hence it can be said that Didi Chuxing had
already created market dominance and being a Chinese company the government
regulations were limited and the company could overlook them. Uber on the other
hand was caught up in a lot of legal matters in China and paid huge sum in fines,
further reducing its investment power. Yidao on the other hand was offering
customized chauffeuring services and did not compete on price, hence its market
and business model was entire different than that of Uber and Didi(Hook, 2016)
Further Uber partnered with Baidu, the largest search company which helped Uber in
the map services and the GPS system; on the other hand Didi took advantage of the
other leading player in the market Tencent and used its services for Maps and
paying bills. We Chat was the largest messaging service in China and company took
full advantage of it and We Chat helped the company in mass penetration. Uber tried
to pull off every trick possible out if its hat, but all the efforts of the company went into
vain. Uber came up with a great promotion strategy, it offered subsidized ride fares
to drivers & riders, but the feature was taken for a ride in the way drivers and riders
created fake accounts to take leverage of the promotional scheme. Uber further
came with green hybrid cars to provide environmental friendly services to the
Chinese market, but it also failed miserably. The company after spending $ 2 billion
out of the $ 13 billion it had raised globally decided to shut down its business, it was
a right call which the company made (Wirtz & Tang, 2016)

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Question 3: What positioning and customer acquisition program the company
could have pursued? Do you believe that Uber could have succeeded? Why?
Uber forayed in the Chinese market with much fanfare in the year 2013, a time which
was right for Uber to enter the market because of the lack of taxi hiring service and
no structure in the way taxi market operated. There was less intervention from the
government and the company was under the assumption that it could replicate its
earlier successful business model in China. However, it was just a dream which did
not turned into a reality (Manjoo, 2014). A 5 why analysis will help us gain further
insight into cutting quickly into the symptoms of the problem and help in dealing with
them once for all. It can also be used for troubleshooting, quality improvement and
problem solving. 5 Why’s can help in getting the company to focus on one single
track or very few tracks to effectively tackle a problem.
The model provision a very simple 7 step process to define the 5 why’s in the
framework
 Assemble the team
 Define the problem
 Addressing the first why-Why the company is facing problem in the Chinese
market- The company is facing problem in the Chinese market due to the
fierce competition it is facing at the hands of Didi, also its inefficiency to
combat the challenges posed by other players. Another reason for facing the
problem is because of its credit card payment system.
 Asking Why four more times- Other reason why the company could not fare
well in the Chinese market were:
o Not relying on the services of the local people and local authorities, the
company completely went forward with its own model of working. This
did not go down well with the local people of China, leading to strong
resentment from the local authorities.
o Uber did not find local partners to help the company in establishing the
business create a momentum and gain market dominance.
o The biggest mistake the company made was competing in the Chinese
market on Price. Price wars in the past in China have never gone down

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well. Several of the failing international companies are; Amazon &
Google.
o The company was a little late in its entry in the Chinese market, and
the biggest reason why the company failed was, not having a fair
understanding of the Chinese market(Rogers, 2015)
 Step 5- Knowing when to stop asking the why- The reason being because
after asking the same question 4 times earlier, the reasons are repeating and
thus does not solve a purpose.
 Addressing the root cause- The root cause which I believe was the biggest
roadblock in its way of success in the Chinese market can be unable to make
a connect with the local people, in acceptance of local culture and not being in
a position to create a formidable partnership with the local players.
 Monitor the measures-In this case, the measure cannot be monitored
because the company sold its business to Didi in a share deal and also
gained a significant share in Lyft, another ride service company of China.
In my opinion, if Uber would have followed the below mentioned strategy the
company could have succeeded:
 Competing on providing great customer service and exceed the expectation of
the Chinese customers. Bring a disruption in the Chinese market by raising
the envelope of its service offering would have put company in a great
position.
 China had a culture of paying in cash; on the other hand Uber went ahead
with paying through credit card services, another reason why the company
could not succeed in the China market.
 Partnering with the local taxi providers and drivers, as this would help the
drivers to not live in a fear of losing a job and they would have gained after
coming under the Umbrella of the Uber brand. The company however did not
give much heads to the needs of the local people, local culture and forgo the
local partnership, needless to say if all this would have been done the fate of
Uber could have swung in some other direction.

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References
Hook, L., 2016. Uber’s battle for China. Financial Times. https://ig. ft. com/sites/uber-
in-china/(21.04. 2017).
Manjoo, F., 2014. With Uber, less reason to own a car. New York Times, pp.1-4.
Rivas, R., 2017. Is Co-Operation the Opposite of Competition?: Two Sides of the
Same Coin.
Rogers, B., 2015. The social costs of Uber. U. Chi. L. Rev. Dialogue, 82, p.85.
Wirtz, J. and Tang, C., 2016. Uber: Competing as market leader in the US versus
being a distant second in China. SERVICES MARKETING: People Technology
Strategy, pp.626-632.

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