Uber’s expansion into China doesn’t seem to be going quite as smoothly as the company had hoped. The US-based ride-sharing app’s office in Guangzhou was reportedly raided by police last night with local authorities accusing the American company of running an illegally organized car service business.
Pictures from the raid circulated on social media and were posted on the Guangzhou Daily’s website—not exactly great PR. The photos show police and public security officers inspecting the Uber offices and allegedly confiscating more than a thousand iPhones, in a joint-operation directed by a number of local agencies including the Administration of Industry and Commerce (AIC), the traffic commission and the Public Security Bureau.
Guangzhou Daily reports that authorities suspect Uber of running an illegal “black cab” business in the city. A spokesman from Uber’s Guangzhou office responded to the accusation, telling Sina News that the raid was just a regular check by authorities and their services in Guangzhou will not be affected.
Uber has expanded to 56 countries and more than 300 markets in just six years. It first reached China in August 2013, with a soft-launch in Shanghai that offered an exclusive luxury car service meant to distinguish the company’s capabilities from local competition. Since, Uber has expanded into nine mainland cities.
On the way, the company has had its share of ups and downs. High points like last week’s launch of a very reasonably-priced helicopter service in Shanghai. Low points like getting hacked all the damn time.
Even without hackers and raiders to worry about, Uber would still face a tough uphill battle in China because of the highly competitive marketplace dominated by two native taxi-hailing apps: Didi Dache, backed by Tencent, and Kuaidi Dache, backed by Alibaba. The two apps control 99 percent of China’s domestic market for booking taxis via smartphone and therefore anger traditional taxi drivers. Oh, and the two apps recently merged and don’t seem to get raided by Chinese police.
Uber has had help in the form of investment from the other Chinese internet giant, Baidu, which has provided the company with not just capital, but with help in localizing its mapping, technology and payment systems. Could be a bit more helpful, though, in improving relations with the Chinese government. It’s the little things.
In a super timely article that was published yesterday, Forbes extolled Uber as one of the few American tech companies that have been successful in China, congratulating the app company on “setting new standards” with its local approach to development. We assume that a local police raid isn’t exactly the sort of standard-setting the author was talking about.
by Alex Linder
[h/t Bill Bishop]