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Uber Losing $1 Billion a Year In China (thestack.com)

Posted by timothy on from the yuan-way-to-approach-it dept.

An anonymous reader writes: Uber CEO Travis Kalanick has revealed that the ride-sharing company is writing off $1 billion a year in order to consolidate its place in the Chinese ride-sharing app market. Kalanick said in a speech at the Vancouver Launch Academy that Uber is deeply engaged in a fight for customers in the Chinese market, and that an unnamed competitor is "buying up market share." Uber's main rival in China is Didi Kuaidi, which invested $100 million in Lyft and Ola to last year in a consolidation effort against Uber's incursion into the market — which many believe to have occurred too late into the development of ride-share schemes in China.

7 of 105 comments (clear)

  1. So not only are they scumbags, but... by Anonymous Coward · · Score: 5, Interesting

    They're underpaying their workers worldwide to burn money in China? Talk about being sacrificed on the altar of capitalism.

    1. Re:So not only are they scumbags, but... by mlw4428 · · Score: 5, Interesting

      I'm unclear why you're being marked down, it's not an untrue statement. Even if it's not intentional, it's certainly happening. Uber cut rates and while they offered a "guarantee' the prices posted are before Uber takes a 20% cut (again...even off of the "guaranteed fee"). Uber didn't drop their commission rate with the cuts and is, instead, spending gobs of money in China. This would appear, by any reasonable person, to look like they're exploiting their US-based Uber drivers. I can't see a good reason to really disagree with him other than to say "well maybe it's not intentional." And that's not really a disagreement about the nature of what his message throwing out.

    2. Re:So not only are they scumbags, but... by mlw4428 · · Score: 2, Interesting

      I would disagree with it not being truthful. I think the real debate is whether the company is intentionally screwing over drivers by cutting fares while dumping hundreds of millions in China just to establish a foothold. It's not really a debate that Uber is asking non-Chinese drivers to take a lower fare, but is spending big money in another market. Hence the reason for my questioning AC's being marked down.

    3. Re:So not only are they scumbags, but... by gstoddart · · Score: 4, Interesting

      that $1 billion isn't being shat out by unicorns.

      How so? The entire rest of their business model is.

      Decreeing you're not covered by regulations because you say so is pretty much all unicorn shit. The entire company is predicated on wishful thinking and unicorn shit, and loudly saying "la la la, we're not a cab company".

      It must be awesome to be able to just unilaterally decree that the magical unicorn shit makes you exempt from any regulations you wish didn't apply.

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      Lost at C:>. Found at C.
    4. Re:So not only are they scumbags, but... by quantaman · · Score: 4, Interesting

      I'm unclear why you're being marked down, it's not an untrue statement. Even if it's not intentional, it's certainly happening. Uber cut rates and while they offered a "guarantee' the prices posted are before Uber takes a 20% cut (again...even off of the "guaranteed fee"). Uber didn't drop their commission rate with the cuts and is, instead, spending gobs of money in China. This would appear, by any reasonable person, to look like they're exploiting their US-based Uber drivers. I can't see a good reason to really disagree with him other than to say "well maybe it's not intentional." And that's not really a disagreement about the nature of what his message throwing out.

      I'm not a fan of Uber but I'm not sure this reasoning is really valid.

      Companies don't approach salary with the idea of "how much can I afford to pay this employee without losing money", they go "how little can I pay this person and still have them work for me".

      So Uber didn't cut rates for US drivers so they could spend money in China, they cut rates for US drivers because it made them more money.

      Second it's not really revenue from US operations that they're using to fund their extension into China and much as it's money from their investors who think they'll get a payoff from cornering the Chinese market (while preventing a Chinese Uber from emerging and hitting their current markets).

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      I stole this Sig
  2. How does Uber lose money? by DogDude · · Score: 5, Interesting

    Uber is an app. An app that's already written and finished. How the HELL do they burn through so much money? I know that most of the dot-coms are just robbing the dumb investors, but to lose this amount of money is truly astonishing.

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    I don't respond to AC's.
  3. "they are giving more than they get back" by k6mfw · · Score: 4, Interesting
    I guess like most people who didn't RTFA and get right to bitching about Uber and cabs in general, I figured to post this insightful comment by Chris Johnson. Also I could not help but read how one person says he will happily buy a new Tesla and use Uber income to pay for the vehicle (and another falling for the "gig economy?"):

    Sure, a bit. Uber's the same thing. It's designed to make maximum use of crazy people and force the others to live up to that standard or be fired.

    I'll define 'crazy Uber people' not as 'danger to customers', but 'people who are bringing more value in terms of vehicle, skill and desire to please, than they are getting back in pay and benefits'. So the crazy Uber person is the one who keeps buying a new Lexus or whatever, vacuums their car three times a day and busts their ass to outperform all the other Uber drivers, so they can continue to win out over anybody else seeking to be a driver.

    The key factor is that they are giving more than they get back, in the belief that they're cornering some kind of market or buying in to something important.

    If you make a business that relies on people like this, you can demolish anybody else because you've worked out how to get voluntary unpaid labor, like the Amazon exec who was said to use her own money to hire subcontractors to do more. As long as there are people who are willing to do that, the market breaks and Amazon/Uber get to do what Wal-Mart did in small towns, break the back of other market participants so they can't break even or continue.

    Another way to be a crazy Uber person is to put more depreciation and wear and tear on your car than you can afford to repair (or replace). It's easy to be crazy in these ways. It's externalities which are easy to overlook. These Amazon/Uber business models are designed to leverage that kind of crazy as hard as possible, and kick out everybody who's not willing to lose (one way or another) on the deal. Psychology is useful in getting people to buy into this stuff.

    As they say, a cult.

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    mfwright@batnet.com