On the sidelines of the Boao Forum held on Hainan, CEO Travis Kalanick told reporters that the company’s loss-making activities in China were sustainable owing to Uber’s success in other markets.
Last month Kalanick said in public that the fierce competition from Didi Kuaidi – which he described as “unprofitable in every city that they exist in” – required them to burn through about $1 billion each year in order to secure market share in China. Now he has offered more insight into the rationale behind the company’s decision.
“If you took our top 30 cities today, today they’re generating over $1 billion in profit a year, just our top 30 cities,” said Kalanick. “And that profit multiplies every year because we’re growing.”
“So that helps us to sustainably invest in our Chinese efforts. Because of the profits we have globally, this is something we can do for the long run,” he added.
According to Kalanick, the company’s strategy is paying off. Market share has risen from between 1 to 2 percent in January 2015 to about 30 percent now.
There are, however, tentative signs that the era of heavily subsidized ride-hailing expansion may be coming to an end. According to Reuters, China’s transport minister said recently that fare subsidies and the supplementing of driver wages was unfair and unsustainable in the long-term.
Kalanick was also reported to have said that Uber had not encountered any regulatory problems since launching in the Chinese market. He must be forgetting the high profile raids on his company’s offices in Guangzhou and Chengdu.