How Uber is Balancing its losses in China

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Uber Technologies is generating more than $1 billion in profit a year in its top 30 cities globally, and partly using that money to bankroll its expansion in China.
The company said in February it was losing more than $1 billion a year in China’s red-hot ride hailing market, where it is battling large local incumbents to win customers.
Uber’s chief executive Travis Kalanick said that China was the company’s most intense market, but also a crucible for new ideas that it has exported to other markets, and that its investment here was sustainable.
Uber and China’s Didi Kuaidi, backed by Chinese technology giants Tencent Holdings Ltd and Alibaba Group Holding Ltd, have both spent heavily to subsidize fares to gain market share, betting on China’s internet-linked transport market becoming the world’s biggest.
The strategy seems to be working for Uber. The company’s market share in China has grown quickly, rising from about 1-2% in January 2015 to about 30% now, Kalanick said.
China’s transport minister said earlier this month fare subsidies and the supplementing of driver wages by ride-hailing companies were competitively unfair and unsustainable in the long-term.
Uber business boosted its valuation in January to more than $8 billion after raising more than $1 billion in its latest funding round.
Kalanick said so far Uber had not faced major regulatory challenges in China, possibly because the government has been trying to drive innovation and Uber fits the narrative.
Kalanick declined to say when he thought Uber would turn a profit in the world’s most populous country, but he seemed to be enjoying the ride regardless.

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