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The Next Big Thing

Uber CEO Travis Kalanick visits China in wake of office raids in Guangzhou and Chengdu

PUBLISHED : Friday, 29 May, 2015, 12:07pm
UPDATED : Monday, 17 August, 2015, 10:16am

US car hailing service Uber’s founder Travis Kalanick is looking to mend fences with China in a recent visit, promising to work with authorities to make sure its services operate legally in the wake of raids by authorities on some of its offices.

In an interview with the Shanghai Morning Post this week, Kalanick said Uber hopes to gain support from local governments and to cooperate to make a positive impact on local economies.

“Uber will try to learn the local laws and bylaws to make sure its service is legal in China,” he told the paper.

Uber has faced a string of legal obstacles in countries around the world, including India, Spain, and Thailand, with governments and taxi companies protesting against it, saying that its service is based on unlicensed drivers and is unsafe and illegal.

During the first week of May, authorities in Chengdu and Guangzhou raided Uber’s offices, shutting them down and taking away computers and phones. Local authorities in China had banned car-hailing apps being used by drivers with no taxi licences in an attempt to regulate the sector and fend off protests from taxi drivers, who had organised strikes in five Chinese cities in January.

Taxi drivers feel increasingly threatened by drivers offering taxi services using smartphone apps. The apps allow drivers without taxi licences to directly pick up passengers, often at a cheaper price than regular taxis. Earlier in May authorities shut down the offices of Chinese car service apps Didi and Kuaidi in the central city of Luoyang after an altercation between drivers. 

The services however have proved wildly popular with Chinese users. Uber and its Chinese rivals have heavily subsidised drivers since last November, and have offered coupons and free rides to grow users. Didi recently said it would spend US$161 million on promotional rides.

Uber now covers nine Chinese cities, including Beijing, Shanghai, Shenzhen and Chongqing. Globally, by May Uber was available in 58 countries and 300 cities. It is estimated that it will generate US$10 billion in revenue this year.

In February, Didi and Kuaidi, backed by internet rivals Tencent and Alibaba, announced they would merge, a move that was seen as a response to the success of Uber in China.

The two local firms have a combined value of about US$6 billion. Their combined service covers 360 cities and has 1.35 million drivers. Social media platform Weibo recently invested US$142 million in the platform.  

Kalanick told the Shanghai Morning Post that Uber would learn how to partner local governments to provide advanced services in Chinese cities, and he will meet Chinese enterprises and local governments to talk about cooperation during his visit.

Earlier in the week Kalanick attended the Guiyang International Big Data Expo, which was also attended by Chinese vice premier Ma Kai and the CEOs of top Chinese tech firms including Xiaomi’s Lei Jun and Alibaba’s Jack Ma.

Kalanick told the paper that Uber is interested in using big data to promote urban economies, which fits the agenda of the Guiyang International Big Data Expo.

Chinese Premier Li Keqiang said in a letter to the Expo organisers that big data is the foundation of resources and core of productivity.

In March he announced his Internet Plus policy that is aimed at creating an e-economy in China.