Uber hits speed bumps in China

Updated: 2014-12-25 06:03

By Xiao Lixin in Beijing(China Daily USA)

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Uber Technologies Inc., on its journey to rapid global expansion, has recently faced challenges and setbacks in its operation in China.

Currently, Uber, which is valued at $40 billion, has operations in eight Chinese mainland cities. It officially entered the market in Shanghai in February, according to Uber CEO Travis Kalanick. And the company has been running free-trial service in Southwestern Chongqing municipality, which would be the ninth of Uber's expansions in China.

However, because of the lack of relevant regulations for this emerging business model over the past couple of years, the operation of Uber and other similar-patterned companies providing car service has drawn attention and concerns from local transportation authorities in China.

An investigation is currently under way in Chongqing, the first time Uber's legality has come under scrutiny in the country. According to the local transportation department, it received anonymous tips from local citizens that car-hailing services Uber and Yongche are engaged in illegal operations.

Now it is investigating the legality of Uber's business model of using private drivers, since private cars that fail to get a license from government-approved car rental companies cannot be used for commercial purposes.

Similar cases have also occurred in other countries and regions Uber has set foot in.

Uber faces a boycott in several countries and beginning in 2015, it will be banned nationwide in France.

In Taiwan there were also concerns that Uber and its drivers were not appropriately licensed and hence operating illegal car-hailing service, which eventually resulted in a fine of 3 million NTD ($95,100). Local transportation authorities in Taiwan are now investigating the possibility of blocking local residents' access to Uber's website and mobile app.

Perhaps the recent team-up with China's search engine giant Baidu Inc., in a strategic cooperation, can improve morale at the San Francisco-based company. The cooperation between the two is believed to help Uber grab a bigger slice of the country's car-hailing business that is now dominated by Kuaidi Dache and Didi Dache by Internet heavyweights Alibaba and Tencent.

According to the latest statistics available, by September cab-hailing apps have garnered around 154 million hits nationwide, with the two highly competitive ones Kuaidi Dache and Didi Dache taking up 54.4 percent and 44.9 percent, respectively, of this fast-growing market.

Baidu signed an agreement last Wednesday to buy a stake in the internationally expanding car-hailing service company. The exact amount of the investment was not disclosed by Baidu at the signing ceremony, yet according to estimates from insiders, the number of capital invested could be as much as $600 million.