Future of transport

Uber claims China drivers making 1m trips a day despite 'staged' protests, fierce competition

PUBLISHED : Friday, 12 June, 2015, 1:32pm
UPDATED : Monday, 17 August, 2015, 10:16am

Uber drivers in China are making close to one million trips every day despite recent raids on the company's offices by government officials and stiff competition from domestic rivals. 

According to an email sent by founder and chief executive Travis Kalanick to Uber investors, released by the *Financial Times*, the company will invest more than US$1 billion in China in 2015. 

“Simply stated, China is the #1 priority for Uber’s global team,” he wrote.

That massive investment is enabled by Uber's latest US$1.5 billion fundraising round, which valued the car-hailing company at upwards of US$50 billion. 

Kalanick said that Uber plans to launch in 50 further cities in China this year, targeting those with populations greater than five million. It currently operates in 11 cities across mainland China, including Shanghai and Beijing. 

“Our riders are completing almost one million trips per day and the business has doubled in the last month,” he wrote, adding that four out of Uber's 10 largest cities are now in China, making it the second biggest regional market after the US. 

Trip volume is also growing at breakneck speed, with Chengdu logging 479 times as many trips as New York City nine months after Uber was introduced in the Sichuan provincial capital. Hangzhou, in wealthy Zhejiang province, logged 422 times as many trips as the New York. 

Kalanick said the company has brought in around US$500 million from commercial partnerships in China, such as one key deal with internet giant Baidu, plus other investments from Chinese firms.

“To put it frankly, China represents one of the largest untapped opportunities for Uber, potentially larger than the US,” Kalanick wrote. 

“Success in China, however, takes commitment over the long haul and a strong will, coupled with a unique understanding of the differences in China.”

Uber has come under severe pressure from Chinese regulators in recent months. In May, authorities in Guangzhou and Chengdu raided Uber's offices there after the central government declared car-hailing services illegal. 

Drivers have also complained about the loss of subsidies, just as the authorities started to clamp down. 

Licensed taxi drivers have held demonstrations against Uber and Chinese competitor Didi Kuaidi, run by China’s Tencent and Alibaba, claiming that the apps were causing them to lose revenue. Drivers have called on the authorities to better police the market. 

READ MORE: Uber losing lustre in China as drivers and passengers complain about incentives and authorities get tough

In the email to investors, Kalanick said that "taxi drivers have been paid to stage protests". He also claimed that Uber drivers were being sent fake text messages informing them that the service was being shutdown. 

Kalanick was also highly critical of local competitors, the chief of which is Didi Kuaidi. This controls upwards of 90 per cent of the Chinese taxi-hailing market and has aggressively expanded into private car-hailing and ride-sharing in recent months. 

Without specifically naming the company, he said that a competitor had "cloned our core product line and is attempting to transition from its legacy taxi business to a similar [person to person] model". 

“So far, none of these manoeuvres have dented our growth,” he said. 

“Given the enormity of the opportunity, we will be formally launching a fundraising process for UberChina on June 22nd and would welcome participation from our existing investor base.”