With an eye popping announcement here on Monday, Travis Kalanic, co-founder and chief executive of the ride hailing company, Uber declared its partnership with its Chinese rival ‘Didi’. The company will now own only 18 per cent of the total company’s share under its original identity.
As per the media reports, both the companies spend a billions of dollars in order to win the Chinese market share. Both the companies made lucrative offers to their drivers and riders. Drivers received fat payments and bonuses while the riders gained enormous amount of discounts on rides.
The war between the two companies was quite visible in the market, as well as in the banking sector. In an article release in ‘The Wall Street Journal’ said, “With an amount of money being raised by both sides, made it impossible for anybody to win”.But looking at the present scenario, Didi did won over the American company. Made possible by the local brand, Alibaba that backed Didi during its façade against this American rival.
About a year ago, when the Uber chief declared its company’s stability in the Chinese market. WSJ quoted him saying, that Uber is presenting a ‘Remarkable and Unprecedented;’ growth in China. Today, after years of struggle with lack of financial support, Kalanick has finally decided to gulp down his pride and give up to his Chinese rival Didi. It must not have been a difficult decision for him, especially after observing its fellow American companies like Facebook, Amazon and Google that failed in the Chinese market.On the contrary their failure must have helped him to undergo this partnership or shall we call it as a ‘takeover’. In fact, Kalanick did justify his decision as a way to become both Amazon and Alibaba. An article released in the New York Times quoted him saying, “If you have a chance to become Alibaba and Amazon at the same time, then why not?
For an observer, it is interesting to see how the company has failed to run independently in the Chinese market. Especially when it has successfully gained enough amount of profit and momentum in US soil and in developing countries like India. Though from a different perspective Uber has taken a smart decision by shaking a hand with the local brand. Over the last few years, companies like Facebook, Amazon and Google had tried their luck to make their mark in the world’s biggest internet market. However, they all failed and faced tough competition from the local brands. Google had Baidu, whereas Facebook had a tough time against WeChat. Even the online shopping store Amazon also faced competition from Alibaba. Baidu, and WeChat work on the similar phenomena whereas, Alibaba works as a medium between the small scale entrepreneurs and the consumers. On the other hand, Amazon owns some of their product, it has its own shipping companies and it is still expanding its nodes in other different sections. Therefore, Alibaba has better prospects in the developing countries like India, Indonesia, etc. Apple is the only American company that has been able to survive in the Chinese market. The company has a major share of China on its plate as it gets large number of sales from different regions in China. Although,Apple is facing some issues with the Chinese policies lately.
Mention worthy, majority of American companies went to China with their original ideas and high hopes of a bright future. On the other hand, they all ended up in sharing their way of functioning and ideas with the Chinese people. It is quite evident that with an opaque policies and functioning of the government it has, it is and it will be difficult for any company or organization to survive independently in China. The country runs on rules that keep on changing with time, desire and mood of the people in power.
Looking at the recent partnership, it is evident that any company that is trying to make its place or to survive in Chinese market, will have to tie up with the local brand, or will have to say goodbye to Chinese cyber space. In a manner, China as a country is itself planning and working towards global dominance. In some coming decades (If we are still alive) we can witness the awakening of the dragon covering the entire global market under its paws.