That would seem to be the default outcome, based on experiences of other American companies in China. It still makes sense for Uber to fight for their place in China, though. The opportunity is too big to just concede defeat. Uber are also probably a bit more street smart than the other American internet companies that have previously failed to establish their place in China.
American tech companies didn't fail to dominate China because of naïveté, they failed because the Chinese Communist Party refuses to let any global tech company establish a sizable foothold when they can create their own Chinese version, especially when the Chinese version helps cement the Great Firewall and control the populace. This is not a contemporary trend, this is the consistent history of China.
Baidu over Google; Alibaba over Amazon; Renren over Facebook and Twitter (both blocked in China).
Only exception is Apple, but they mostly sell products instead of info (and is fashionable among the Chinese elite). But then, there's always Xiaomi...
US company views China a good to have, but not live or death market. Native Chinese company does not. it's the vital difference that matters.
Take Google for example. will it break the copyright law to provide MP3 download for its own survival in USA? I bet yes. But in China, it won't. It's not an issue of morality, or suppression of Chinese Community Party.
Amazon VS. Alibaba. Jack Ma personally visited clients to seal deals, would Jeff Bezos do the same to his Chinese clients? I don't think so.
MSN VS. QQ. In 2005/6, 10m+ Chinese MSN users were assaulted by a social engineering hack. It only took 6 months for MS to recognised the issue. Tencent normally reacts in 48 hours.
Twitter VS. Sina Weibo. When Sina decided to do Weibo, it was a full scale operation with so many functions Chinese users loved that even if Twitter was allowed in Chinese market, it would lose in weeks.
when you are playing a market game in China, facing competitors whose lives are in stake, the result is obvious. Your competitors would do anything to survive, including breaking laws, lobbying/bribing govt./officers.
You are dead right. Bribes that are simply a part of the game in China are a punishable offence in the West.
Another reason foreign social networks tend to be blocked in China: if someone makes a post on Weibo or Renren that the party doesn't like, they can simply have it removed without fanfare...along with the poster...
My point is less about bribe or lobbying. It's about the mentality. For native Chinese company, the stake is so high that when facing overwhelmingly foreign opportunists they are willing to do anything to survive, faster reaction to users/customers, product adjustment to local users, more marketing spending, wage PR war with naive nationalism, you name it. Bribing and politics are really tip of the iceberg.
Global(US) company cant survive in China, a major reason is that their services are not competitive enough(although a few exceptions, e.g. Google Search), comparing to local rivals.
Amazon, for example, their delivery is not working in China. Competitors are offering same-day delivery, or even 3-hour delivery one or two years ago in China, while Amazon is relying on some crappy 3rd party delivery with a high deductible you have to meet before your delivery can be free.
Wechat centers around chatting as a take on SNS, and it works. It is not Facebook, but works like Facebook. While the direct copy of Facbook, Renren is long dying.
So it is really a grey area when we talking about success in China. What you need to realize, Chinese companies are very competitive. Shit tons of money pours to Chinese internet companies over the past decade. Tencent/Alibaba are all 100 billions company, and there are sizable of others worth more than 10 billions. Also, China has good engineers too, might not live up to bay area standard, but they are also much cheaper. Last but not least, I want to point out, a lot of 'tech' companies here are not really tech driven, rather they are just tech users, so their model can be easily copied and recreated, not only in China, but also by other big US companies.
All in all, it is not realistic to expect what work here automatically print money in China. South korea is an interesting example, where GFW doesn't exist, but US companies also have a hard time there, it is just that China is bigger so it gets much more attention.
I'm guessing you're just a year too young to remember Google having to pull out of China (and various similar US website forced out of China disasters about the same time) that the CCP pulled to give their home growns the big edge.
Claiming the domestic market is better because the CCP basically forced all the competition out by quite publicly asking them all to spy on the chinese citizens, politically unfeasible at the time for the US companies, is not that they 'are not competitive enough'.
It's Chinese protectionism and desire for central control.
I honestly feel like you're trying to rewrite what is very well documented history and very recent history at that. It was widely discussed here at the time.
I do agree Google and FB is largely harmed by the great firewall from the every beginning, they don't even have a chance to compete. But Uber is not really blocked in China at all. They worked really actively with their government and even throw in a DC in China. Yes, Uber's competitor is fierce, but they made it work. Unlike the fact that China still cannot make a smart phone as good as iPhone, or cannot make their own OS like windows, that's they Apple and MS thrived.
> But Uber is not really blocked in China at all. They worked really actively with their government and even throw in a DC in China.
Uber is not blocked, for now. That can change in a whim. The Chinese government can simply create regulations that apply to them that do not apply to their local competitors. This has happened many times before in the past....
>Unlike the fact that China still cannot make a smart phone as good as iPhone, or cannot make their own OS like windows, that's they Apple and MS thrived.
While the Chinese did not design the iPhone to say that they "cannot make a smart phone as good" is completely false. For one, the iPhone is largely manufactured in China and has been for a few generations now. Second, some of the best iphone competitors / android devices are being made by Chinese companies.
>Second, some of the best iphone competitors / android devices are being made by Chinese companies.
Such as? Even if true they are running non-chinese OS software...
Making the iPhone in China means they could make iPhones, not necessarily that they can design and build their own full stack phone without "borrowing" heavily from foreign cpetitors.
> Such as? Even if true they are running non-chinese OS software...
Huawei M8 is nice and well made.
> Making the iPhone in China means they could make iPhones, not necessarily that they can design and build their own full stack phone without "borrowing" heavily from foreign cpetitors.
I generally agree with this, but you may be underestimating how quickly others can catch up in this globalized world.
Plus the blueprint has been well established by the other big Asian tech companies. Look at how quickly Samsung "caught up".
They were naive in thinking they could play in China without being buddies with the government. If any company has become expert about government relations recently, it's Uber.
There is nothing special or unique about Uber. Yes, their app is pretty. Yes, they are ubiquitous around the world. But there is nothing about it that cannot be copied by a Chinese state-owned enterprise. One could argue Uber's only major advantage is its waterfall of investors.
Uber's most significant long tail value is their heaps of traffic flow and passenger data. Sounds like the exact kind of thing a rich and historically totalitarian regime would want for themselves. And if you want to spot patterns in a potential dissident, it helps to know where they go.
More riders = more drivers. More drivers = more riders opening that app first. I have personally learned to check Uber first before Lyft because I know Uber drivers are closer and the fare estimate will be lower. Uber's advantage is their institutional experience pushing competitors out of markets they want and their cutthroat attitude.
In the cities (Denver, Austin, Portland, Las Vegas...) I've been spending time in recently I've felt like the opposite. Lyft seems to have more drivers and Lyft is almost always cheaper. I've been told by drivers that they try to drive for Lyft as much as possible as they get a bigger cut of the fare, but I have no idea if that's true.
The opportunity is only as big as the Chinese government will allow. If Uber didn't learn that lesson it soon will, and it will have cost them $1 Billion+
The Chinese market was also big for Google, but once the government makes a decision, that "market" will either infect you (ie obligate you to follow Chinese government rules when it comes to your operations outside of China as well) or make you re-evaluate why you want to be in China at all. Google pulled out. The market isn't as big as people think because it's not actually a market.
Indeed; it all hinges whether they can get the government to accept them. I have a feeling Uber won't be quite as idealistic or principled as Google were.
