5 ms·

Uber Slayer: How China’s Didi Beat the Ride-Hailing Superpower

44 points by srunni 10y ago

FT_intern 10y ago
through anti-competitive policies?
- vkou 10y ago
  What kind of anti-competitive policies? Dumping their product below-cost?
3pt14159 10y ago
This is just a Bloomberg PR piece. China has a plan for the internet: Don't let outsiders control critical IT infrastructure / personal data. > It was widely suggested in press accounts that the Chinese government helped Didi in its battle against Uber. Cheng rejects that, noting that as the largest ride-hailing company, Didi had to shoulder most of the regulatory burden and paid tens of millions of yuan to cover driver traffic citations and other fines. Here in 2015 is the president of Didi talking about the strong government support they received: http://video.cnbc.com/gallery/?video=3000395252 http://video.cnbc.com/gallery/?video=3000395252 I'm not criticizing them, if I were China I wouldn't want the USA in charge of that either, but let's not pretend this was a level playing field.
- mrharrison 10y ago
  I agree, to that extent, I really wish Bloomberg or Business Insider articles weren't posted on HN. They often are fluff and don't understand the details, and thus just create unneeded noise on HN.
  - 15thandwhatever 10y ago
    I disagree on a wholesale "ban". There are some excellent Bloomberg pieces that dive into details correctly (particularly items by Matt Levine and Megan McArdle over at Bloomberg view). But these shiny, infographic-like Bloomberg Businessweek features tend to be light and fluffy. Ugh.
- smitherfield 10y ago
  A thought that occurred to me recently, is that the main purpose of China's "Great Firewall" isn't so much silencing dissent[0], as it is protectionism. By making it effectively impossible for foreign (i.e. American) internet companies to operate in China, they've ensured that the spaces occupied by Google, Facebook, Twitter, Amazon, Uber, and even to some extent Microsoft have been filled by Chinese-owned and China-based companies. [0] Although that too, of course.
  - usaar333 10y ago
    Oh definitely. The interesting trade-off though (as with all protectionism) is where the boundary between promoting and hindering innovation is. VPN blocking Facebook probably has good ROI for generating internal social networks (which in turn can be monitored). Blocking Google, even more so GitHub, seems far more dangerous economically as you impair innovators' abilities to obtain research done abroad. (Google is especially bad since a large percent of English language sites have Google dependencies (css/js hosting) -- effectively most of the English internet has become unusable in China without a VPN since the complete *google.com block went in).
- usaar333 10y ago
  To be fair, Uber is heavily subsidizing rides in China (below cost). Even in the US, a foreign company doing this could have anti-dumping tariffs slapped on them.
usaar333 10y ago
The article is rather light on details on what Didi actually did better, but from using Uber as a foreigner in China, I could see significant problems in Uber's product execution: 1. The Android app continues to use Google Maps which is Great Firewall blocked, meaning I had to use a VPN to load uncached tiles. 2. Uber in turn IP blocks EC2, preventing me from using my main VPN while in app. 3. Entities on the map are shifted by the GCJ-02 offset (https://en.wikipedia.org/wiki/Restrictions_on_geographic_data_in_China https://en.wikipedia.org/wiki/Restrictions_on_geographic_dat...), meaning entities on the map are shifted by 0.5 miles (look at those cars driving on parkland: https://www.dropbox.com/s/hhkrjyka5uq0pfb/PeopleUber.png?dl=0 https://www.dropbox.com/s/hhkrjyka5uq0pfb/PeopleUber.png?dl=...) 4. User support was absolutely non-existent. After I responded to an automatic email from the local community manager inviting me to ask any questions, I only received an automated emails telling me I won't be helped. 5. Help pages in the app on Uber China tell me to see the Chinese translation, with no actual link to said translation. While the foreigner use-case in China is niche, the sheer amount of obvious (and easily resolvable) problems I ran into suggests that Uber has organizational problems ensuring both drivers and customers have good experiences in foreign countries. One blog from Jan 2014 highlights how bad the execution was at launch: https://www.larrysalibra.com/5-problems-with-uber-in-china-and-why-i-love-it/ https://www.larrysalibra.com/5-problems-with-uber-in-china-a... - the most absurd being that Uber (at that time) only accepted US-branded credit cards which few Chinese nationals hold.
- jensvdh 10y ago
  Why does Uber block EC2?
  - dylz 10y ago
    This is pretty standard, we block all "cloud" ranges for end-user-facing things (antifraud, etc) Bots on EC2 scraping and bruteforcing and whatnot, free tier being abused for free proxies
    - toomuchtodo 10y ago
      Good to know for future projects.
readhn 10y ago
I completely understand Chinese (or any other country) entrepreneurs, why let some foreign company come in and take all the money (ultimately a lot of it outside the country) when you can do the same internally. The idea is not a rocket science, all about execution. And locals know the specifics of China more than a bunch of silicon valley grads. Cheers to these guys for making it work in China. And Good luck to Uber fighting strengthening competition all around the world.
- adventured 10y ago
  The question becomes what the consequences of that should be. Since you're arguing in favor of elaborate protectionism, that becomes a central issue. Should Xiaomi be artificially blocked from selling smart phones in the US? Should all Huawei products be blocked? Should the policy of the US Government be to directly assist Apple versus Samsung (or any other competitor) in the US market? Should the US begin directly subsidizing immense steel production, using the US Dollar reserve currency to intentionally bankrupt China's steel producers via Fed printing to pay for it all? To what extent should the US be using the US Dollar to destroy foreign corporations to gain a competitive advantage? Or better yet, using the NSA to do so. How far should protectionism go? Should the US use the dollar to start massive state enterprises, printing dollars to pay for it all, to buy up foreign corporations. For example, maybe the US should create a massive potash conglomerate from a state owned enterprise backed by the Fed directly. Then use some USD printing to merge up with other big potash players around the world, and use political leverage and threats to force other nations into allowing those mergers. Japan for example has been buying up its own stock market, maybe the US should go a step further than that. If China wants to compete using big state owned enterprises, why shouldn't the US respond in kind, and then some? China also directly funds non-state owned enterprises through various banking channels. Maybe the Fed should be providing 0% interest loans to US corporations to advantage them to acquire specific major foreign competitors for essentially no cost. Should the Fed provide Apple, Microsoft, Amazon, Google, etc. with a nearly unlimited budget to begin manufacturing all of their hardware & components in the US, along with perpetual subsidies to keep that production local? Might as well take advantage of available leverage. If not, then why is it ok for China's government to set up intentional barriers to entry or to encourage rather drastic dumping policies in several big industries? Should foreign companies not be allowed to buy majority ownership positions in domestic US corporations? Should the US Government deny all attempts by foreign corporations to buy domestic corporations? Why is it considered ok for China to directly advantage and subsidize so many massive state enterprises, if the US and other nations aren't supposed to behave that way? Should the US Government look the other way, while a major US entrepreneur steals tens of billions of dollars from a Chinese company, as Jack Ma did with Yahoo and AliPay? Is that the kind of protectionist playing field that is desirable? Facebook, Twitter, Google and numerous other US companies have been directly blocked from competing in China in all sorts of ways. Which companies of China's should the US be blocking in response to that?
the_common_man 10y ago
For those crying wolf about protectionism... In general, I think most nations should have more closed door policies like China. My country (which won't be named) does not have a startup ecosystem anymore and we have become a consumption ground for one silicon valley startup after another. Instead of fostering local startups and paying some money (since many bootstrap and do not have big pockets), all the companies just take the freebies of silicon valley startups. We had a local chat start up but slack ate their lunch. Everyone here just uses the slack free tier. How do you compete against free? Eventually, this has led to all the data of individuals and companies on US soil (or wherever those startups feel like stashing the data). We have no control or say over it. If we are to look for alternatives, there is none in our own country. And for those who think the world is one giant land where everyone can roam freely, it's impossible for me to move to any of the western world because of visa restrictions. And US has the harshest work visas on the plante.
- bpodgursky 10y ago
  > We had a local chat start up but slack ate their lunch. Everyone here just uses the slack free tier. How do you compete against free? The point of division of labor (aka how civilization got built) is that it's not _necessary_ to spend time re-doing the same thing others are doing. Slack is giving you something for free that you don't _have_ to spend time or money building now. Now you have X engineers free to work on something actually innovative, not just a clone of X, and getting a cheap/free service from slack. The point of economic policy should not be to produce pointless jobs.
  - chrischen 10y ago
    The problem is the world is divided into factions, and China is a massive country that just happens to be a separate faction, which means they can't divide labor with the US, they have to compete head on, or else they won't get a fare share of the pie. US had a head start on development, which means these two factions didn't have a level playing ground to compete for a piece of the pie. Therefore China must protect to get back on level playing ground.
jimjimjim 10y ago
china is a difficult market. if it wasn't for the perpetual carrot of 1 billion consumers i doubt many would bother.
bigdrum 10y ago
http:// http://
JumpCrisscross 10y ago
Giving an American company where your people are, where they are going and with whom they are likely meeting and traveling was a non-starter before we confirmed every Tom, Dick and Harry at a three-letter agency has the ability to stalk their - and anybody else's - kids and ex girlfriends.
1_2__3 10y ago
Wait, so we're supposed to believe this was some kind of merit or business acumen thing? Is anyone really that gullible?
polemic 10y ago
Uber's problems extend far beyond China. While the app is nice, its the cheap fares that bring the vast majority of users to Uber, vs competitors or plain ol' taxis. Those cheap fares are artificially low, funded by SV money and ignoring regulatory issues. But money does run out (or investors want a real return eventually), and regulators either change the law (nullifying their advantage) or crackdown completely. Uber's network effects are almost non-existant. Every small geographic market has to be fought and won the hard, and expensive way. And when the money runs out and the fares go up, there is no market lock-in. Barriers to entry are low, potential competitors include anyone with a car, Uber just doesn't have a way to lock in market dominance. Which is probably why they're rushing toward driverless vehicles as fast as they possibly can. Their own staff are an existential threat so they have to remove them as soon as possible. Except that puts them in direct competition with a whole range of extremely well funded, and well connected industry players. So. Good luck Uber, this is just an example writ large of where Uber is heading in the not to distant future.

44 points by srunni 10y ago

FT_intern 10y ago

through anti-competitive policies?

vkou 10y ago
What kind of anti-competitive policies? Dumping their product below-cost?

3pt14159 10y ago

This is just a Bloomberg PR piece. China has a plan for the internet: Don't let outsiders control critical IT infrastructure / personal data. > It was widely suggested in press accounts that the Chinese government helped Didi in its battle against Uber. Cheng rejects that, noting that as the largest ride-hailing company, Didi had to shoulder most of the regulatory burden and paid tens of millions of yuan to cover driver traffic citations and other fines. Here in 2015 is the president of Didi talking about the strong government support they received: http://video.cnbc.com/gallery/?video=3000395252 http://video.cnbc.com/gallery/?video=3000395252 I'm not criticizing them, if I were China I wouldn't want the USA in charge of that either, but let's not pretend this was a level playing field.

mrharrison 10y ago
I agree, to that extent, I really wish Bloomberg or Business Insider articles weren't posted on HN. They often are fluff and don't understand the details, and thus just create unneeded noise on HN.
- 15thandwhatever 10y ago
  I disagree on a wholesale "ban". There are some excellent Bloomberg pieces that dive into details correctly (particularly items by Matt Levine and Megan McArdle over at Bloomberg view). But these shiny, infographic-like Bloomberg Businessweek features tend to be light and fluffy. Ugh.
smitherfield 10y ago
A thought that occurred to me recently, is that the main purpose of China's "Great Firewall" isn't so much silencing dissent[0], as it is protectionism. By making it effectively impossible for foreign (i.e. American) internet companies to operate in China, they've ensured that the spaces occupied by Google, Facebook, Twitter, Amazon, Uber, and even to some extent Microsoft have been filled by Chinese-owned and China-based companies. [0] Although that too, of course.
- usaar333 10y ago
  Oh definitely. The interesting trade-off though (as with all protectionism) is where the boundary between promoting and hindering innovation is. VPN blocking Facebook probably has good ROI for generating internal social networks (which in turn can be monitored). Blocking Google, even more so GitHub, seems far more dangerous economically as you impair innovators' abilities to obtain research done abroad. (Google is especially bad since a large percent of English language sites have Google dependencies (css/js hosting) -- effectively most of the English internet has become unusable in China without a VPN since the complete *google.com block went in).
usaar333 10y ago
To be fair, Uber is heavily subsidizing rides in China (below cost). Even in the US, a foreign company doing this could have anti-dumping tariffs slapped on them.

usaar333 10y ago

The article is rather light on details on what Didi actually did better, but from using Uber as a foreigner in China, I could see significant problems in Uber's product execution: 1. The Android app continues to use Google Maps which is Great Firewall blocked, meaning I had to use a VPN to load uncached tiles. 2. Uber in turn IP blocks EC2, preventing me from using my main VPN while in app. 3. Entities on the map are shifted by the GCJ-02 offset (https://en.wikipedia.org/wiki/Restrictions_on_geographic_data_in_China https://en.wikipedia.org/wiki/Restrictions_on_geographic_dat...), meaning entities on the map are shifted by 0.5 miles (look at those cars driving on parkland: https://www.dropbox.com/s/hhkrjyka5uq0pfb/PeopleUber.png?dl=0 https://www.dropbox.com/s/hhkrjyka5uq0pfb/PeopleUber.png?dl=...) 4. User support was absolutely non-existent. After I responded to an automatic email from the local community manager inviting me to ask any questions, I only received an automated emails telling me I won't be helped. 5. Help pages in the app on Uber China tell me to see the Chinese translation, with no actual link to said translation. While the foreigner use-case in China is niche, the sheer amount of obvious (and easily resolvable) problems I ran into suggests that Uber has organizational problems ensuring both drivers and customers have good experiences in foreign countries. One blog from Jan 2014 highlights how bad the execution was at launch: https://www.larrysalibra.com/5-problems-with-uber-in-china-and-why-i-love-it/ https://www.larrysalibra.com/5-problems-with-uber-in-china-a... - the most absurd being that Uber (at that time) only accepted US-branded credit cards which few Chinese nationals hold.

jensvdh 10y ago
Why does Uber block EC2?
- dylz 10y ago
  This is pretty standard, we block all "cloud" ranges for end-user-facing things (antifraud, etc) Bots on EC2 scraping and bruteforcing and whatnot, free tier being abused for free proxies
  - toomuchtodo 10y ago
    Good to know for future projects.

readhn 10y ago

I completely understand Chinese (or any other country) entrepreneurs, why let some foreign company come in and take all the money (ultimately a lot of it outside the country) when you can do the same internally. The idea is not a rocket science, all about execution. And locals know the specifics of China more than a bunch of silicon valley grads. Cheers to these guys for making it work in China. And Good luck to Uber fighting strengthening competition all around the world.

adventured 10y ago
The question becomes what the consequences of that should be. Since you're arguing in favor of elaborate protectionism, that becomes a central issue. Should Xiaomi be artificially blocked from selling smart phones in the US? Should all Huawei products be blocked? Should the policy of the US Government be to directly assist Apple versus Samsung (or any other competitor) in the US market? Should the US begin directly subsidizing immense steel production, using the US Dollar reserve currency to intentionally bankrupt China's steel producers via Fed printing to pay for it all? To what extent should the US be using the US Dollar to destroy foreign corporations to gain a competitive advantage? Or better yet, using the NSA to do so. How far should protectionism go? Should the US use the dollar to start massive state enterprises, printing dollars to pay for it all, to buy up foreign corporations. For example, maybe the US should create a massive potash conglomerate from a state owned enterprise backed by the Fed directly. Then use some USD printing to merge up with other big potash players around the world, and use political leverage and threats to force other nations into allowing those mergers. Japan for example has been buying up its own stock market, maybe the US should go a step further than that. If China wants to compete using big state owned enterprises, why shouldn't the US respond in kind, and then some? China also directly funds non-state owned enterprises through various banking channels. Maybe the Fed should be providing 0% interest loans to US corporations to advantage them to acquire specific major foreign competitors for essentially no cost. Should the Fed provide Apple, Microsoft, Amazon, Google, etc. with a nearly unlimited budget to begin manufacturing all of their hardware & components in the US, along with perpetual subsidies to keep that production local? Might as well take advantage of available leverage. If not, then why is it ok for China's government to set up intentional barriers to entry or to encourage rather drastic dumping policies in several big industries? Should foreign companies not be allowed to buy majority ownership positions in domestic US corporations? Should the US Government deny all attempts by foreign corporations to buy domestic corporations? Why is it considered ok for China to directly advantage and subsidize so many massive state enterprises, if the US and other nations aren't supposed to behave that way? Should the US Government look the other way, while a major US entrepreneur steals tens of billions of dollars from a Chinese company, as Jack Ma did with Yahoo and AliPay? Is that the kind of protectionist playing field that is desirable? Facebook, Twitter, Google and numerous other US companies have been directly blocked from competing in China in all sorts of ways. Which companies of China's should the US be blocking in response to that?

the_common_man 10y ago

For those crying wolf about protectionism... In general, I think most nations should have more closed door policies like China. My country (which won't be named) does not have a startup ecosystem anymore and we have become a consumption ground for one silicon valley startup after another. Instead of fostering local startups and paying some money (since many bootstrap and do not have big pockets), all the companies just take the freebies of silicon valley startups. We had a local chat start up but slack ate their lunch. Everyone here just uses the slack free tier. How do you compete against free? Eventually, this has led to all the data of individuals and companies on US soil (or wherever those startups feel like stashing the data). We have no control or say over it. If we are to look for alternatives, there is none in our own country. And for those who think the world is one giant land where everyone can roam freely, it's impossible for me to move to any of the western world because of visa restrictions. And US has the harshest work visas on the plante.

bpodgursky 10y ago
> We had a local chat start up but slack ate their lunch. Everyone here just uses the slack free tier. How do you compete against free? The point of division of labor (aka how civilization got built) is that it's not _necessary_ to spend time re-doing the same thing others are doing. Slack is giving you something for free that you don't _have_ to spend time or money building now. Now you have X engineers free to work on something actually innovative, not just a clone of X, and getting a cheap/free service from slack. The point of economic policy should not be to produce pointless jobs.
- chrischen 10y ago
  The problem is the world is divided into factions, and China is a massive country that just happens to be a separate faction, which means they can't divide labor with the US, they have to compete head on, or else they won't get a fare share of the pie. US had a head start on development, which means these two factions didn't have a level playing ground to compete for a piece of the pie. Therefore China must protect to get back on level playing ground.

jimjimjim 10y ago

china is a difficult market. if it wasn't for the perpetual carrot of 1 billion consumers i doubt many would bother.

bigdrum 10y ago

http:// http://

JumpCrisscross 10y ago

Giving an American company where your people are, where they are going and with whom they are likely meeting and traveling was a non-starter before we confirmed every Tom, Dick and Harry at a three-letter agency has the ability to stalk their - and anybody else's - kids and ex girlfriends.

1_2__3 10y ago

Wait, so we're supposed to believe this was some kind of merit or business acumen thing? Is anyone really that gullible?

polemic 10y ago

Uber's problems extend far beyond China. While the app is nice, its the cheap fares that bring the vast majority of users to Uber, vs competitors or plain ol' taxis. Those cheap fares are artificially low, funded by SV money and ignoring regulatory issues. But money does run out (or investors want a real return eventually), and regulators either change the law (nullifying their advantage) or crackdown completely. Uber's network effects are almost non-existant. Every small geographic market has to be fought and won the hard, and expensive way. And when the money runs out and the fares go up, there is no market lock-in. Barriers to entry are low, potential competitors include anyone with a car, Uber just doesn't have a way to lock in market dominance. Which is probably why they're rushing toward driverless vehicles as fast as they possibly can. Their own staff are an existential threat so they have to remove them as soon as possible. Except that puts them in direct competition with a whole range of extremely well funded, and well connected industry players. So. Good luck Uber, this is just an example writ large of where Uber is heading in the not to distant future.