Global car-hailing app Uber and its local rival in China, Didi Kuaidi, are de facto in a business war, after Tencent, a key investor of Didi, decided to remove Uber from one of the most powerful online marketing platforms in the world’s No 1 internet market.
What’s the key takeaway of the story here for other foreign businesses if they are considering doing or expanding business in China? It’s getting more difficult to make money in China, especially when you have to compete with local monopoly players.
The news that all Uber’s WeChat accounts had been removed by Tencent, the parent and owner of WeChat, China’s most popular real-time messaging app, where many businesses have set up accounts to promote products and services and engage with customers, shocked the technology world over the weekend. Tencent said it blocked Uber on WeChat, affecting Uber’s online services in at least 16 Chinese cities, because of “malicious marketing”, something Uber denied.
It’s been no secret for the past few months that there’s no friendship between Uber, the US-based car-hailing app that has changed the way people travel every day, and Didi, its top rival. Uber co-founder and chief executive Travis Kalanick accused Tencent publicly at an industry forum in late October of using WeChat to censor positive news about Uber and play up negative stories. Tencent didn’t respond to those complaints. If Kalanick’s allegation were true, Tencent would be the one playing dirty tricks through “malicious marketing”.
Tencent is one of the three most powerful internet firms in China – collectively known as “BAT” – along with Baidu, China’s top search engine, and Alibaba, the No1 e-commerce firm in the world’s second-biggest economy.
But my bigger concern is whether everyone can expect fair play when doing business in China, at a time when top leaders are calling on foreign investors to continue to support Chinese economy and have pledged to strengthen the rule of law to protect the business interests of all parties.
Businesses compete with each other all the time and all around the world, especially when they grow bigger and expand beyond their home markets. In the good, old days we had a “gentlemen’s rule” to show respect to your rivals, but in China nowadays winning business is all about winning market share, by any means.