Question

What are the reasons for Uber’s expansion problems in China? And what could Uber learn from this in India?

Answer 1

Uber faced new cultural, political, and economic conditions as businesses grow internationally that place additional, unexpected strains on their domestic business models. They also face rivals who are much better at knowing local environment than they do. No technology firm has faced these struggles more profoundly than Uber. Uber has succeeded in spreading from North America to every populous continent-Europe, Asia, South America, Africa, and Australia in less than seven years. Uber had reached one new city a day at one point. As if that weren't enough, Uber has recently expanded its services with a rickshaw as motorbike service in markets like Thailand and India.

Yet, in the US, Uber wasn't so lucky. It is also struggling in Europe, in addition to its well-documented troubles in China. A classic globalization mistake has been committed by the young tech company: it naively believed that its business model and market strategy, which eventually solidified its market-leading position in the US, could be translated just as easily into other countries. The complexities of operating in countries that represent vastly different economic, political, and cultural climates were seriously underestimated.

First, the young, ambitious, and well-down business should have realized that, while rife with economic opportunity, China, India, and Europe differ from the US in significant ways. It should have looked closely at its procedures and policies in order to determine whether they are suitable for each particular nation. Uber would have done better to ask the proper authorities for permission to operate and thus to express its respect for existing laws and institutions, no matter how time consuming it might seem.

This would also have spent time establishing relationships with the different unions representing taxi drivers, rather than fomenting negative reactions with violent methods of entry. A cooperative strategy aimed at predicting country-specific risks would have allowed Uber to escape much of the political – and common – backlash he has faced. It would have helped curry cultural favor with the local consumer base. And this would have helped make Uber a more powerful local market rival.