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Uber's Rise In China May Be Counterfeit
retroworks writes: Josh Horwitz' story in Quartz reports both the apparent rapid success of Uber adaptation in China, and a queasy footnote for shareholders applauding the rapid growth. While China is a natural ride-sharing haven, it also has a tradition of gaming the western system. From the story: "Accomplices can sit in their apartments, disable location settings, and specify a pickup not far from the actual location of driver's vehicle, the report said. The driver then accepts the hail, and goes on a trip without a passenger. After the accomplice approves payment, the driver will – hopefully – pay back the fee and share a cut of the bonus. It's not the most clever get-rich scheme on the planet. But for drivers, it's better than waiting for a hail in a parking lot." Uber's spokeswoman told the Quartz writer that the company has an on-the-ground team who investigate into these various type of fraud, then uses "deep analytics, and new tools developed by our Chinese engineers in our dedicated fraud team to combat against such fraud." The Uber spokeswoman declined to elaborate on the nature of these tools.
While there might be a problem with fraud in Uber use in China, is it any worse than in any other country? There is an implicit racism in all these stories that hit the media decrying 'Chinese Fraud and Duplicity'. I am sure there is plenty, as totalitarian governments have been shown to increase dishonesty in their populations, but is it really worse than any other developing country or country lacking a government?
Granted, the story will 'sell more papers' than a similar story about Uber being defrauded by teenage stoners from Kansas. China is a competing economic power with the US and EU, and as a result it seems to being demonized because Chinese people didn't have the common sense to be born with white skin. This constant barrage of stories about 'Chinese' dishonesty paints an image of them as being inscrutable and untrustworthy as a race.
HA! I just wasted some of your bandwidth with a frivolous sig!
Okay, but at some point Uber has to make money, and at that point, it is then a net loss for the driver and his co-conspirator.
At some point Uber has to make money, but that point may be off in the future somewhere. WARNING: I READ TFA. Uber is paying "new driver" bonuses. So the driver signs up for an account, does enough fake rides to earn the bonus, then still has enough to make a profit even after paying both Uber and the accomplice. Then they create another Uber account with another name, and do it again.
Uber is giving out free money to get people to use the service
I have lived and worked in China. If there is any way to game a market, the Chinese will figure out how to do it. When BAT (British American Tobacco) first entered the Chinese market, they were surprised to see sales higher than expected. Sales continued to grow for several months, and they ramped up production. Then, after six months, sales plummeted to zero, and never recovered. They took huge losses on infrastructure and unsold merchandise.
It took them a long time to figure out what happened. Their sales were high because their products were being purchased by their competitors, and stored in damp warehouses, where they grew stale and moldy. Then after six months, all the accumulated rotten cigarettes were dumped onto the wholesale market, crashing the price, and destroying BAT's reputation for quality.