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Uber started its business in San Francisco in 2010. Initially, the company started off with only one driver, but after three years, with a growth rate of 20% each month, Uber now covers 140 cities in 39 countries all over the world. Due to these statistics, it seems that Uber’s CEO Kalanick wants to oc- cupy the customarily exclusive Chinese market.
Last July, Uber shared the contents of a news briefing in Beijing and officially announced that the company is entering into the Beijing market. It was revealed that Uber had already been on a trail operation for several months, and as of July, had achieved good results. Therefore, in order to highlight the importance of the Beijing market, Uber’s CEO, Travis Kalanick, appeared at the news briefing in order to introduce Uber’s history and concept.
Uber in China

Uber entered the Chinese market last year under the new Chinese name“You Bu.”
Unlike other multinational companies, Uber does not have a head office in China or in Greater China. Each city has three members in charge of operations, and Uber China only has fifteen members. Since Uber expands rapidly and is spread over a wide geographical area, it is not suitable for Uber to establish a head office in China like other traditional foreign companies. With the exception of a head office in San Francisco, Uber has not established head offices in any other countries. In addition, the company only has one operations director, Allen Penn, in Asia.
Penn once revealed in an interview that the key to the success of Uber’s global strategy is that the company has a team in each market that is familiar with the local market. These teams perform tasks in an all-round way, such as market survey and marketing. The teams treat each city differently. It is like establishing a small and highly independent company in a local place.
In China, the operation of Uber is much different from that of America. In the US, private cars are the majority vehicles of transportation; however, in China, private cars are not allowed when it comes to commercial transportation. Therefore, Uber has chosen to cooperate with local taxi companies, and adopt a cooperative strategy known as profit division. Taxi drivers are trained for a period of time in order to meet courtesy requirements and be in line with the service level of the companies that are in the US market.
According to Kalanick, after Uber started its business in China, the growth rate of Shanghai increased rapidly. Beijing’s growth rate increased even faster than that of Shanghai, and Beijing is now one of the fastest growing cities in the world. Uber Spends Heavily in the Chinese Market

Uber is spending money at a breakneck rate in order to try and crack the Chinese market; the company is even paying its drivers in addition to the fares that they collect.
With almost $6 billion in venture capital, Uber, based in San Francisco, is doling out bonuses up to three times the amount of its fares. Uber is counting on the fact that its exceptional rise in the United States can be matched in China.
So far, the company’s strategy is working. Uber is shattering assumptions that young American tech companies cannot compete with local rivals.
This spending spree has attracted interest from people such as Jacky, a systems analyst at an international telecommunications company, who recently began moonlighting for Uber with its Ford Fiesta in Shanghai. In late May, Uber said it had created more than 60,000 jobs in China over the past month. Due to the development of Uber’s services, there has been an onslaught of protests from many taxi drivers.
“This is a really great opportunity for me to make some extra money,” said Jacky, 34, who declined to give his full name because he was releasing internal information about Uber.
Though other ride-hailing services also offer driver bonuses, Jacky said that Uber pays the most. Jacky stated that in the first three weeks of May, he made the equivalent of about $1,000 by working for Uber, which is almost half of his $2,100 monthly salary at the telecommunications company. He has also stated that the majority of his earnings as a driver come from subsidies.
While China represents huge scaling opportunities in its markets, it has fended off the entry of just about every major Western technology startup. Uber, a five-year-old company that operates in more than 310 cities and 58 countries worldwide, faces homegrown Chinese rivals like Di Di and Kuai Di, which occupy more than 90 percent of the market and are backed by two of the largest Chinese Internet companies, Alibaba and Tencent. Uber may also have to grapple with a fickle central government that could shut the company out of the market overnight.
However, more affluent and cosmopolitan Chinese consumers have flocked to Uber’s service. These consumers are attracted by lower fares that are on average at least 35 percent cheaper than taxis and the more luxurious cars.
In the central Chinese city of Chengdu alone, Uber has attracted 20,000 drivers since 2014, which greatly outnumbers the 26,000 drivers that Uber has employed since 2011Therefore, Travis Kalanick, Uber’s chief ex-ecutive, is teaming up with the Chinese Internet giant Baidu and making multiple visits to the country. An Uber spokeswoman declined to comment on the scale of the company’s business in China. However, Uber is rumored to be working with investors to raise another $1.5 billion or so in financing, which would value the business at $50 billion.
Uber has attracted Chinese customers like Li Yufang, 28, a Beijing resident and an employee at a property developer, who switched to Uber in January from other ride-hailing services.
Ms. Li, a valued customer, said, “I love Uber because the price is really low compared to taxis or private limos.”
There have also been jokes posted on Chinese social media pages about Uber and how the company provides a convenient, self-selecting pool of potential husbands for single women.
Differentiated Marketing Challenges in the Taxi Industry
In order to challenge the traditional taxi industry, Uber has become engaged in two differentiated markets: good and cheap service and service that is even cheaper than traditional taxi companies such as Uber Black and UberX.
Uber has positioned high-end service providers in the Asian market as an example.
In terms of service fee, the minimum charge for Uber services is 50 Yuan, and the starting price is 40 Yuan. Uber announced officially that during hours of high demand, the price will be changed accordingly.
However, UberX, which provides lower priced services, aims to target a wider range of user groups. Bill Gurley, Uber’s investor and board member, said that UberX grows the fastest, and in many regions, even surpasses the services of illegal taxis. He also stated that Uber is trying to reduce the price of UberX as soon as possible.
The starting price of UberX is 15 Yuan, which is 2.3 Yuan per kilometer, and the minimum charge is 20 Yuan. Compared to Beijing’s taxi price, with the exception of the minimum charge, there is almost no difference.
Therefore, Uber is not just for high-end users like some of its rivals have said.
In addition, Uber China allows users to pay by Alipay, which is a feature that is customized for Chinese people.
A subdivided market allows Uber users to have more choices, whereas, the traditional taxi industry only provides single services.
Nowadays, Uber is not only involved in the taxi business, but is also involved in transportation. For example, during the last Spring Festival, Uber provided a ‘call and perform a lion dance” activity in China.
China Cracks Down on Uber Cars This May, Uber China was judged by the Guangzhou Industrial and Commercial Bureau because the company was suspected of unlicensed operation due to its failure to provide a business license and the fact that the company has taken away a number of iPhones. In response to these accusation, Uber stated that this event has no effect on the platform and that the company will continue to keep a sound communication with relevant departments.
It seems that Uber has encountered many obstacles in China. If the com- pany is identified as an illegal operation, it will face severe punishment.
Early in last February, when Uber arrived in Shenzhen, the company was investigated and pressure by local authorities; in December, driver training in Chongqing was abruptly stopped and a local newspaper said that “Uber encourages private car drivers to be involved in illegal taxi business.”
Over the past two years, Uber has endeavored to develop a Chinese market and has been introduced to many Chinese civilians; however, the company seems to have met many obstacles in the Chinese market.
The company is not popular with everyone in Shanghai. Governmentowned cab companies hate the competition and local officials have impounded Uber cars and fined drivers.
The Ministry of Transport of PRC has already prohibited the use of private cars d in Uber, and the company has to become habituated with the Chinese market and policy.
Uber has a large amount of user information in China. Since it is a foreign company, any news about stolen user information or threats to national information security would be a deadly strike for Uber.
This March, it was reported that Uber was suspected of tax evasion. Although evidence has yet to be discovered, this newfound information has weakened people’s confidence in Uber.
For Uber, its future development has a strong connection to China’s local rivals, such as Di Di Kuai Di, Shen Zhou and Yi Dao. According to the latest statistics, last year’s accounts of Chinese Apps amounted to 172 million. Kuai Di and Di Di occupied 99.8% of the 172 million. Therefore, Uber will have to make quite an effort in order to catch up with these large and successful companies.
Fake Drivers and Passengers are Boosting Uber’s Growth
According to many reports, Chinese Uber drivers have been logging in fake rides and signing up for multiple Uber accounts in order to nab the company’s cushy bonuses. These reports include stories of drives who have their accomplices pretend to be passengers. It is reported that Uber has been offering generous incentives to drivers who ferry passengers on The People’s Uber, which is the name for the company’s peer-to-peer service in China(known as UberX in most markets and UberPop in Europe).
By one account, Uber was paying drivers 300 Yuan (about US$50) for 30 trips and 400 Yuan for 40 trips.
These subsidies appear to have worked magic for Uber in China. Despite arriving late to the market and being well behind incumbent companies such as Di Di and Kuai Di, Uber has shot to the top of the app store rankings.
However, these subsidies may encourage drivers and passengers to play the system, making it hard to predict Uber’s eventual success in China.
A report from a state-run website stated that some Uber drivers find accomplices through WeChat chat rooms, which allows people to book bogus rides.
According to the report, fake passengers can sit in their apartments, disable location settings, and specify a pickup spot not far from the actual location of a driver’s vehicle. The driver then accepts the request and drives around without a passenger. After the fake passenger approves of the payment, the driver will pay back the fee and share a cut of the bonus. Therefore, for many drivers, it is easier to wait for a request in a parking lot.

Other Uber drivers appear to be circumventing Uber’s system for hiring new drivers by signing up for accounts with fake credentials, which enables them to get first-time driver bonuses over and over again.
Usually, Uber recruits drivers by checking their IDs and driver’s licenses and outsourcing background checks and vehicle inspections to third parties. However, a black market has emerged on Taobao (China’s leading e-commerce site), where users can buy their way in.
There are a handful of offers on Taobao that give people access to Uber’s driver side app. After handing over payment to the vendor, aspiring drivers get access to a unique username, password, and Alipay account that they can use to sign up as a driver.
One Taobao seller said that obtaining multiple Uber accounts allows drivers to use false identities and boost their earnings.
These practices might seem particularly alarming given Uber’s claims about safety. The company claims to conduct background checks in all of its markets, usually through third-party companies. Despite the implementation of this procedure, an unregistered driver can still easily borrow the phone of a friend who has already passed through Uber’s check system.
Last July, Uber shared the contents of a news briefing in Beijing and officially announced that the company is entering into the Beijing market. It was revealed that Uber had already been on a trail operation for several months, and as of July, had achieved good results. Therefore, in order to highlight the importance of the Beijing market, Uber’s CEO, Travis Kalanick, appeared at the news briefing in order to introduce Uber’s history and concept.
Uber in China

Uber entered the Chinese market last year under the new Chinese name“You Bu.”
Unlike other multinational companies, Uber does not have a head office in China or in Greater China. Each city has three members in charge of operations, and Uber China only has fifteen members. Since Uber expands rapidly and is spread over a wide geographical area, it is not suitable for Uber to establish a head office in China like other traditional foreign companies. With the exception of a head office in San Francisco, Uber has not established head offices in any other countries. In addition, the company only has one operations director, Allen Penn, in Asia.
Penn once revealed in an interview that the key to the success of Uber’s global strategy is that the company has a team in each market that is familiar with the local market. These teams perform tasks in an all-round way, such as market survey and marketing. The teams treat each city differently. It is like establishing a small and highly independent company in a local place.
In China, the operation of Uber is much different from that of America. In the US, private cars are the majority vehicles of transportation; however, in China, private cars are not allowed when it comes to commercial transportation. Therefore, Uber has chosen to cooperate with local taxi companies, and adopt a cooperative strategy known as profit division. Taxi drivers are trained for a period of time in order to meet courtesy requirements and be in line with the service level of the companies that are in the US market.
According to Kalanick, after Uber started its business in China, the growth rate of Shanghai increased rapidly. Beijing’s growth rate increased even faster than that of Shanghai, and Beijing is now one of the fastest growing cities in the world. Uber Spends Heavily in the Chinese Market

Uber is spending money at a breakneck rate in order to try and crack the Chinese market; the company is even paying its drivers in addition to the fares that they collect.
With almost $6 billion in venture capital, Uber, based in San Francisco, is doling out bonuses up to three times the amount of its fares. Uber is counting on the fact that its exceptional rise in the United States can be matched in China.
So far, the company’s strategy is working. Uber is shattering assumptions that young American tech companies cannot compete with local rivals.
This spending spree has attracted interest from people such as Jacky, a systems analyst at an international telecommunications company, who recently began moonlighting for Uber with its Ford Fiesta in Shanghai. In late May, Uber said it had created more than 60,000 jobs in China over the past month. Due to the development of Uber’s services, there has been an onslaught of protests from many taxi drivers.
“This is a really great opportunity for me to make some extra money,” said Jacky, 34, who declined to give his full name because he was releasing internal information about Uber.
Though other ride-hailing services also offer driver bonuses, Jacky said that Uber pays the most. Jacky stated that in the first three weeks of May, he made the equivalent of about $1,000 by working for Uber, which is almost half of his $2,100 monthly salary at the telecommunications company. He has also stated that the majority of his earnings as a driver come from subsidies.
While China represents huge scaling opportunities in its markets, it has fended off the entry of just about every major Western technology startup. Uber, a five-year-old company that operates in more than 310 cities and 58 countries worldwide, faces homegrown Chinese rivals like Di Di and Kuai Di, which occupy more than 90 percent of the market and are backed by two of the largest Chinese Internet companies, Alibaba and Tencent. Uber may also have to grapple with a fickle central government that could shut the company out of the market overnight.
However, more affluent and cosmopolitan Chinese consumers have flocked to Uber’s service. These consumers are attracted by lower fares that are on average at least 35 percent cheaper than taxis and the more luxurious cars.
In the central Chinese city of Chengdu alone, Uber has attracted 20,000 drivers since 2014, which greatly outnumbers the 26,000 drivers that Uber has employed since 2011Therefore, Travis Kalanick, Uber’s chief ex-ecutive, is teaming up with the Chinese Internet giant Baidu and making multiple visits to the country. An Uber spokeswoman declined to comment on the scale of the company’s business in China. However, Uber is rumored to be working with investors to raise another $1.5 billion or so in financing, which would value the business at $50 billion.
Uber has attracted Chinese customers like Li Yufang, 28, a Beijing resident and an employee at a property developer, who switched to Uber in January from other ride-hailing services.
Ms. Li, a valued customer, said, “I love Uber because the price is really low compared to taxis or private limos.”
There have also been jokes posted on Chinese social media pages about Uber and how the company provides a convenient, self-selecting pool of potential husbands for single women.
Differentiated Marketing Challenges in the Taxi Industry
In order to challenge the traditional taxi industry, Uber has become engaged in two differentiated markets: good and cheap service and service that is even cheaper than traditional taxi companies such as Uber Black and UberX.
Uber has positioned high-end service providers in the Asian market as an example.
In terms of service fee, the minimum charge for Uber services is 50 Yuan, and the starting price is 40 Yuan. Uber announced officially that during hours of high demand, the price will be changed accordingly.
However, UberX, which provides lower priced services, aims to target a wider range of user groups. Bill Gurley, Uber’s investor and board member, said that UberX grows the fastest, and in many regions, even surpasses the services of illegal taxis. He also stated that Uber is trying to reduce the price of UberX as soon as possible.
The starting price of UberX is 15 Yuan, which is 2.3 Yuan per kilometer, and the minimum charge is 20 Yuan. Compared to Beijing’s taxi price, with the exception of the minimum charge, there is almost no difference.
Therefore, Uber is not just for high-end users like some of its rivals have said.
In addition, Uber China allows users to pay by Alipay, which is a feature that is customized for Chinese people.
A subdivided market allows Uber users to have more choices, whereas, the traditional taxi industry only provides single services.
Nowadays, Uber is not only involved in the taxi business, but is also involved in transportation. For example, during the last Spring Festival, Uber provided a ‘call and perform a lion dance” activity in China.
China Cracks Down on Uber Cars This May, Uber China was judged by the Guangzhou Industrial and Commercial Bureau because the company was suspected of unlicensed operation due to its failure to provide a business license and the fact that the company has taken away a number of iPhones. In response to these accusation, Uber stated that this event has no effect on the platform and that the company will continue to keep a sound communication with relevant departments.
It seems that Uber has encountered many obstacles in China. If the com- pany is identified as an illegal operation, it will face severe punishment.
Early in last February, when Uber arrived in Shenzhen, the company was investigated and pressure by local authorities; in December, driver training in Chongqing was abruptly stopped and a local newspaper said that “Uber encourages private car drivers to be involved in illegal taxi business.”
Over the past two years, Uber has endeavored to develop a Chinese market and has been introduced to many Chinese civilians; however, the company seems to have met many obstacles in the Chinese market.
The company is not popular with everyone in Shanghai. Governmentowned cab companies hate the competition and local officials have impounded Uber cars and fined drivers.
The Ministry of Transport of PRC has already prohibited the use of private cars d in Uber, and the company has to become habituated with the Chinese market and policy.
Uber has a large amount of user information in China. Since it is a foreign company, any news about stolen user information or threats to national information security would be a deadly strike for Uber.
This March, it was reported that Uber was suspected of tax evasion. Although evidence has yet to be discovered, this newfound information has weakened people’s confidence in Uber.
For Uber, its future development has a strong connection to China’s local rivals, such as Di Di Kuai Di, Shen Zhou and Yi Dao. According to the latest statistics, last year’s accounts of Chinese Apps amounted to 172 million. Kuai Di and Di Di occupied 99.8% of the 172 million. Therefore, Uber will have to make quite an effort in order to catch up with these large and successful companies.
Fake Drivers and Passengers are Boosting Uber’s Growth
According to many reports, Chinese Uber drivers have been logging in fake rides and signing up for multiple Uber accounts in order to nab the company’s cushy bonuses. These reports include stories of drives who have their accomplices pretend to be passengers. It is reported that Uber has been offering generous incentives to drivers who ferry passengers on The People’s Uber, which is the name for the company’s peer-to-peer service in China(known as UberX in most markets and UberPop in Europe).
By one account, Uber was paying drivers 300 Yuan (about US$50) for 30 trips and 400 Yuan for 40 trips.
These subsidies appear to have worked magic for Uber in China. Despite arriving late to the market and being well behind incumbent companies such as Di Di and Kuai Di, Uber has shot to the top of the app store rankings.
However, these subsidies may encourage drivers and passengers to play the system, making it hard to predict Uber’s eventual success in China.
A report from a state-run website stated that some Uber drivers find accomplices through WeChat chat rooms, which allows people to book bogus rides.
According to the report, fake passengers can sit in their apartments, disable location settings, and specify a pickup spot not far from the actual location of a driver’s vehicle. The driver then accepts the request and drives around without a passenger. After the fake passenger approves of the payment, the driver will pay back the fee and share a cut of the bonus. Therefore, for many drivers, it is easier to wait for a request in a parking lot.

Other Uber drivers appear to be circumventing Uber’s system for hiring new drivers by signing up for accounts with fake credentials, which enables them to get first-time driver bonuses over and over again.
Usually, Uber recruits drivers by checking their IDs and driver’s licenses and outsourcing background checks and vehicle inspections to third parties. However, a black market has emerged on Taobao (China’s leading e-commerce site), where users can buy their way in.
There are a handful of offers on Taobao that give people access to Uber’s driver side app. After handing over payment to the vendor, aspiring drivers get access to a unique username, password, and Alipay account that they can use to sign up as a driver.
One Taobao seller said that obtaining multiple Uber accounts allows drivers to use false identities and boost their earnings.
These practices might seem particularly alarming given Uber’s claims about safety. The company claims to conduct background checks in all of its markets, usually through third-party companies. Despite the implementation of this procedure, an unregistered driver can still easily borrow the phone of a friend who has already passed through Uber’s check system.