Uber’s efforts to get a grip over the Chinese ride-hailing app market are coming at a cost much greater than what it might have imagined when it first rolled out its service in late 2013.
“We are profitable in the U.S., but in China, we’re losing over a billion dollars a year,” Travis Kalanick, CEO and cofounder of Uber, said at Vancouver’s Launch Academy.
Uber’s billion-dollar loss comes as the battle over capturing the Chinese market seems to be growing fiercer by the day. In China, the San Francisco-based company faces intense competition with Didi Kuaidi, which holds stronger control over the market.
While Didi Kuaidi remains a relatively small player in front of Uber, which is valued at over $60 billion, it has resorted to a funding spree and collaborating with other South Asian companies, including India-based Ola, Singapore’s Grab and Uber’s top American competitor, Lyft, to stall Uber’s growth in the market with its cross-border payment offerings. To counteract, Uber raised $8 billion to fuel its Chinese wing.
“Look, we’re in China, where we have a fierce competitor, who is raising billions of dollars but is unprofitable in every city that they exist in,” Kalanick said hinting at rival Didi Kuaidi. “The question for us is: Do we want to exist in China or not, and can we contain the irrational long enough to get to the point where the world does get rational?”
Kalanick’s statement, as Mashable pointed out, is a sharp deviation from Uber’s own growth pattern that has, so far, heavily relied on big investments. Just late last week, the company announced a new $200 million investment round led by LetterOne to power its growth in emerging markets. However, that is apparently not how its CEO wants to see the company grow.
“I wish the world wasn’t that way,” Kalanick said, “because I prefer building versus fundraising.”