Uber on a collision course with China's taxi drivers and cartels
Robert Boxwell says Uber's aggressive push into China is unlikely to end well
News of Uber racing into China brings to mind images of young, rich guys with naked girls in Ferraris, racing late at night on a Beijing ring road. You know it's going to end badly - though in Uber's case, the young, rich guys will be in a billion-dollar wreck instead of a million-dollar one - but it really doesn't bother you that much.
Uber is making its presence felt as it chases an initial public offering. The company's reported valuation - US$50 billion - is in the stratosphere, so you know Silicon Valley and Wall Street are looking to cash out. Hyperbolic statements about the China market, which Uber chief executive Travis Kalanick isn't reluctant to make, will help keep the valuation up until an IPO.
But Uber has two big problems in China: its millions of taxi drivers, and the local cartels for which they work.
Taxi drivers universally hate Uber, Silicon Valley's latest "disruption" to make our lives better, because Uber makes their lives worse. Uber puts unlicensed, unregulated, uninsured private drivers on the roads to take taxi customers at cut-rate prices. China has millions of taxi drivers, many making barely enough money to feed their families. What exactly do they do when taxi driving dries up?
Unlike, say, Microsoft, whose apps made millions of Chinese more productive and richer, Uber's app makes millions of Chinese less productive and poorer, even as Kalanick boasts of the "jobs" the company creates. He uses the word in a Silicon Valley, new-economy kind of way. To keep costs down, Uber claims its drivers are independent contractors, not employees. The California Labour Commission rejected this argument last month, just one of scores of legal problems Uber is facing around the world as management races to build scale - and perceived value - before an IPO.
The company has got itself into so many bare-knuckle fights with regulators around the world - Portland, Oregon's transportation commissioner called company management "a bunch of thugs" last year - it hired a former Obama public relations honcho to "soften" its image. Its public statements now ooze Silicon Valley cool-talk, but its actions haven't changed. It just hides them better.