American online car booking service Uber planned to land in one Chinese city every three months from now on, according to Martin Lee, head of the company’s Asian team (report in Chinese). In addition to Shanghai, the first Chinese city that Uber launched service, Uber is prepping for headways in Beijing and Kong Hong.
Screenshot of Uber
As a car booking platform, Uber sealed cooperation deals with local taxi companies and share commissions with them. Uber’s cars are generally nicer than average taxies in China, including BMW 7-series, Audi A8, Mercedes S-Class, and therefore, the charges are much higher, about two to three times of that for the ordinary taxies. The company’s market strategy that eyes high-tier market avoids the competition with rising taxi apps as well as policy risks, since Chinese government stepped in earlier this year to regulate the market (report in Chinese).
Uber’s minimum fare is $7 against 14 yuan ($2.27) for ordinary taxis in Shanghai. Uber is temporarily charging US dollars in Shanghai until the team is ready to accept the Chinese yuan.
Uber may create a new market by introducing taxi companies that previously provide services for hotels to enter ordinary taxi market. But the firm may not make profits in mainland China market in the short term, because the running cost of high-tier cars is usually 15 to 20 times as compared with ordinary taxies, but Uber only double or triple their charges in an attempt to seize the market.
Uber announced Series C financing from Google Ventures, Texas Pacific Group and Benchmark in late August at a valuation of $3.5 billion. It currently operates in 41 cities globally, with three cities in Asia, namely, Singapore, Taipei and Seoul.
Uber’s primary competition in China is local rivals of Yongche and Zuche, which have already established their presence across China.
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