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Uber's Rise In China May Be Counterfeit

Posted by timothy on from the uber-has-a-reputation-for-gaming-too dept.

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.

4 of 86 comments (clear)

  1. Trying to figure out how this works... by TWX · · Score: 5, Insightful

    How is money made, if the fake passenger pays X to Uber, the driver earns X-% from Uber, and the driver pays X-% back to the fake passenger?

    --
    Do not look into laser with remaining eye.
    1. Re:Trying to figure out how this works... by rhazz · · Score: 5, Informative
      You aren't trying very hard then, since TFA clearly states that Uber is adding special bonuses and subsidies to attract drivers. They are weathering smaller profits and some losses to gain market share because there were existing players in the market.

      By one account, Uber was handing drivers 300 yuan (about US$50) for every 30 trips and 400 yuan for every 40.

      Seems like they need to add other metrics into their bonus system, like a minimum fare required to count towards the bonus.

    2. Re:Trying to figure out how this works... by ShanghaiBill · · Score: 5, Interesting

      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.

  2. Re:China, the yellow scourge by gnasher719 · · Score: 5, Insightful

    There is an implicit racism in all these stories that hit the media decrying 'Chinese Fraud and Duplicity'.

    That's you looking for racism. If Uber is so desperate for growth that a driver can make money by driving his wife around the block all day, especially if he doesn't actually drive her but has a coffee with her or something that slashdot users wouldn't comprehend, then people will take advantage of that. In every country. And Uber fully deserves it.

    Because in the end these drivers make a few Yuan, while Uber fraudulently makes billions of dollars by pretending to investors that they have genuine growth, when this is only due to losing money on every trip made.