Uber Looks into Expanding in Smaller Cities to Compete with Ride Hailing App Didi
Unnerved by the dominance of the ride hailing app Didi in the Chinese market, Uber see a potential in chipping away at the company’s monopoly outside first tier cities. Uber stated that its ride hailing service in Hefei the capital of east China’s Anhui Province have increased by 30 percent daily since it was launched last March. This will be the fastest uptake of the company has seen in 400 cities around the world where it operates. As of now Uber accounts for 50 percent of ride haling app service in the city.
UberPool, an app that allows drivers to pick up more than one paying passengers in one time was launched last year that was created to compete with Didi in ride sharing services. Sharing economy in China is booming and ride services is fast gaining popularity as an alternative to using public transportation in daily commute. Although conventional wisdom says that top tier cities such as Shanghai and Beijing are the most easiest places for a business to launch in China, Uber saw better success in the second and third tier cities. Hangzhou and Chengdu are both second tier cities used to be Uber’s best performing cities in the world.
Using smartphones and mobile internet is closing the gap between the mega cities in China with the rest, this places cities big or small on the same starting line since the apps used by people in large cities are also being used by people living in small cities. Like all foreign companies, Uber made inroads into the Chinese market by top tier cities and is now beginning to penetrate smaller cities during the second half of 2104. The ride hailing app is seeking to expand their presence in 100 more Chinese cities this year including the northeastern and western regions.
Didi has a larger presence operating in 400 Chinese cities and holds 84 percent of the ride hailing market. Uber China head of strategy Liu Zhen stated that the company eyes a expansion in China and weighs the decision in entering cities that is based on the criteria which includes local population consumption patterns and level of development.