A woman uses her smartphone in front of an advertisement for Uber in Shaoyang city, central
Uber is going to great lengths to create more services in China amid cutthroat competition in the ride-hailing market where its bitter rival Didi Chuxing claims to hold a lion's share.
In a sign that it is inclined to circumvent the direct rivalry with Didi, Uber is setting its sight on China's flourishing tourism market to diversify its income.
Recently, Uber unveiled its Uber+Travel development strategy to provide the Chinese users with point-to-point travel experience by integrating different stages of a trip into an all-in-one app, in collaboration with its Chinese partners including Hainan Airlines, Qunar.com, Qyer.com, Tongcheng Tourism, TripAdvisor, Baidu, JD.com and China Telecom.
The tourism industry has contributed about 10 percent of China's GDP, beating education and auto, said a report released by the China National Tourism Administration. According to statistics from China Galaxy Securities, the online travel transaction volume in 2015 amounted to 470 billion yuan, representing an increase of 49.6 percent from the previous year. And the figure is expected to skyrocket to 900 billion yuan in 2016, according to Analysys.
Conceivably, the Uber+Travel initiative could serve as a strategic remedy to Uber's financial predicament in the Chinese ride-hailing market where it is losing more than $1 billion every year, while trying to convince investors of its potential to be profitable.
In recent months, the fundraising war between Uber and Didi has been lifted to a higher level. In June, Didi raised $7.3 billion from Apple, Alibaba Group and China Life Insurance in its latest fundraising round after Uber announced to receive $3.5 billion in investment from Saudi Arabia's sovereign wealth fund, which brought its total fundraising to about $11 billion.
The constant efforts to seek funding from domestic and global investors by Uber and Didi seem to have exacerbated the competition in the Chinese ride-hailing market, spurring the two players to place market share above profitability.
How to survive the Chinese market in this vicious spiral with an annual billion-dollar loss? Uber appears to be one up on Didi in finding a revenue stream by adding additional services to its app, which it does not want to be an app that only focuses on calling a cab.
"This reminds us that Uber is a global company serving customers worldwide... It is rooted in each of the cities," said Kate Wang, Uber China's vice president of operations and regional general manger of central China, at a recent TechCrunch event. Wang added that all-in-one solutions are needed in the Chinese market, which is a driving force behind Uber's new apps in the country.
According to the Silicon Valley unicorn, the Uber+Travel service will connect Chinese travelers to everything they might need during a trip, ranging from itinerary planning to ticketing, and from hotel reservation to local transportation.
In Shanghai, Uber has designed a special one-stop service for travelers who plan to visit the Disneyland theme park, which started operation two weeks ago.
However, Zhong Pinhong, executive president of Bla Travel, described the Uber+Travel strategy as a "package service" at the current stage, which is primarily based on the car-hailing app. "Currently, the Uber+Travel service is just used for the ride-hailing business, which can be promoted by rising travel demand," said Zhong. But Zhong did not completely dismiss the big growth potential of Uber, which he depicted as a global platform, in the travel market, citing the possibility that the Uber drivers could be turned into local tour guides or concierge for travelers. "The role shift is likely to create much better services for outbound tourists once it could be tied with services offered by local scenic spots, hotels and restaurants," added the executive.
However, Uber is facing a direct confrontation in the travel market with one of its partners, Qunar.com, which has established a transport department with hundreds of thousands of cars deployed nationwide for airport pickup and transporting travelers to local places of interest. Li Qiao, the department's chief, said that his team is responsible for monitoring and analyzing the flight data to ensure seamless dispatching of drivers in order to avoid idle operation, which cannot be achieved by Uber drivers at present.
The introduction of the Uber+Travel strategy is not Uber's first effort to diversify its business in China. In May, Uber launched a mobile city guide service named UberLIFE within the Uber app in Shanghai, Hangzhou and Chengdu, after discovering that its Chinese users would stay on the app for an average of 90 seconds once their rides begin. The service could be seen as a way to generate profits.
UberLIFE offers users tips on things to do in the local cities, including sporting events, theme parties, theaters and art festivals, with a goal of getting more users to use the Uber app and retain them on the app longer.
"You can think of UberLIFE as an electronic lifestyle magazine, a time-killing book or a city handbook, which can help its users know better about a city. (With the UberLIFE service), the Uber app will not be an app that only brings a passenger to place B from place A. That is the ultimate goal of UberLIFE," said Mei Jie, UberLIFE's director in Shanghai.
The UberLIFE service will be soon available in more Chinese cities this year, said Uber.
Uber has a presence in 60 cities across China, with the country's third and fourth-tier cities being its next targets, from which Liu Zhen, senior vice president of strategy at Uber China, said new revenue streams will come. Liu claimed that Uber has roughly a third of the Chinese ride-hailing market as of June.