I.

INTRODUCE
1. The importance of studying the international business environment (IBE)
1.1 For individual
The fact that working across countries is a necessity for most firms in this day and age
opens the door for many people who research international business.
https://www.csss.es/the-importance-of-studying-international-business/
- Gain an international perspective
The future is global, and an understanding of different countries and cultures will help
you in your personal and professional life. It is important to have an international
outlook and if you understand other cultures, you will know their market, making you
a valuable asset in any business
- Work across international boundaries and culture
You will study the global challenges faced by companies and how to negotiate with
different cultures. This problem-solving approach will expand your worldview and
help you understand different perspectives. Business is all about the connections you
make, so there will be opportunities to network with people abroad.
- Learn many transferable skills
International business researchers have their cultural awareness and curiosity, which
are vital in many different careers. Some transferable skills you will be able to learn
include presenting, problem solving, planning and management. People who have all
these abilities can be suitable for many different working positions such as:
management, marketing, accounting, or even human resource management,...
- Advanced business knowledge
Studying international business gives you a thorough knowledge of everything from
cross-cultural management to research methods and global entrepreneurship. People
with extensive knowledge who thrive in a dynamic environment are more likely to
succeed than others.
https://www.leedsisc.com/blog/benefits-of-studying-international-business
https://daihoc.fpt.edu.vn/vi-sao-ban-nen-hoc-kinh-doanh-quoc-te-ky-nang-can-thiet-
de-thanh-cong/
1.2 For business
IBE has a direct or indirect impact on businesses. Changes in the environment lead to
changes in business activities, forcing businesses to adjust their business purposes,
measures and functions and they even have to change their products, distribution
channels, customers, etc.
https://tailuanvan.com/tong-quan-ve-moi-truong-kinh-doanh-quoc-te.html
http://quanlydoanhnghiep.edu.vn/phan-tich-tac-dong-cua-moi-truong-kinh-doanh-
quoc-te/
There are some key factors are given below
- Benefit: Researching IBE can help organizations become more efficient and
cost-effective. It allows them to benefit from economies of scale, obtain lower-
cost resources and utilize the latest technologies available in different markets.
- Customer: By researching in many different markets, companies can access
new opportunities and gain valuable insights into customer behavior and
preferences. This can help them develop better products/services and make
more informed decisions.
- Resource: Companies have access to a wider pool of resources due to access to
the international environment, which may not be available locally.
- Risks: By understanding the international business environment better,
companies can reduce risks such as foreign exchange rate fluctuations, political
instability, etc.
- Innovation: The international business environment also helps organizations to
become more innovative and flexible in their operations, which is essential for
staying ahead of the competition.
Thus, analyzing the IBE aims to help companies adapt and be appropriate in business
activities, reduce formulas and increase business opportunities, results and limit risks.
https://emeritus.org/in/learn/leadership-international-business-environment/
2. The expected results of the report

The group chose this topic to analyze the specific situation and causes of Uber's failure
in the Chinese market - a market full of potential but also full of challenges. Thereby
determining the differences in factors such as socio-cultural, economic, political as
well as the competitive environment in China that created Uber's failure.

Simultaneously, describing the approaches Uber takes to solve those problems. From
there, evaluate the company's approaches to propose better alternative solutions and
draw lessons for companies in a similar situation.

II. PRESENT THE SITUATION

1. Introduce the company
Uber is an American technology company that develops and operates mobile
applications that connect users with drivers providing transportation services, founded
by Garrett Camp and Travis Kalanick in 2009.
It is headquartered in San Francisco, California, USA and this is also where the
company promoted its service for the first time in June 2010.
Uber offers mobility as a service, ride-hailing, food delivery (Uber Eats), package
delivery, courier and freight.
 - Mobility: Includes ride-hailing service business. This is the company's leading
car booking business. It connects customers with drivers who provide trips in
various types of vehicles such as cars, motorbikes, autos, taxis and minibuses.
Mobility includes activities related to Uber's financial partnerships and
transportation services. This segment generated revenue of $2.3 billion in the
fourth quarter of 2021, accounting for more than 39% of Uber's total revenue in
the quarter.
- Delivery (formerly Eats): Provides a platform for consumers to search for food
and discover local restaurants, order meals and have them delivered at the
restaurant or delivered. This is a three-sided marketplace that connects drivers,
restaurant owners and customers on the Uber platform. Delivery has become
the most interesting part of Uber's business. In 2021, Uber continued to
strengthen its position in the delivery business. Delivery achieved revenue of
up to 2.4 billion USD in the fourth quarter of 2021, accounting for nearly 42%
of the company's total revenue in the quarter.
- Uber Freight: This is also a rapidly growing segment of the company in 2021.
Uber leverages its existing platform to connect service providers with shippers
and provide carriers with upfront pricing, transparency, and ordering
capabilities. This segment includes transportation management and other
logistics services. UberFreight generated $1.1 billion in revenue in the fourth
quarter of 2021, accounting for nearly 19% of the company's revenue.
- All other: Including Uber for Business, Uber Health (Uber Health is a ride-
hailing service specifically for facilities related to the health industry such as
hospitals, clinics, etc.), Uber Elevate, Uber Money,
Uber was one of the leading businesses in the online ride-hailing service industry, with
the slogan "Everyone's private driver" and excellent service continue to attract
consumers to its service. Uber provides a variety of services with prices ranging from
affordable to luxury: Uber X, Uber XL, Uber Pool, Uber Black, Uber Lux, Uber
WAV…In the United States, as of October 2022, Uber had a 74% market share for
ride-sharing and a 24% market share for food delivery. According to Uber's SEC
filings December 31, 2021, Uber and its subsidiaries operated in 10,500 cities of 72
countries
In 2011, Uber raised $11 million in its first funding round in February, and $37
million in its second funding round in November. In August 2013, it secured $363
million in its third round of financing. With multiple rounds of funding, Uber was not
content with limiting its business to the US. In November 2011, Uber expanded its
business outside the US for the first time, with Paris, France as its first international
destination.
In 2013, Uber first entered the Asian market after being successful in the US and
European markets. Uber has expanded operations in Taiwan, India, China and many
other developed countries in Asia. (Bugador, 2019)
In July 2014, Uber officially announced it would start operations in Beijing. When
entering the Chinese market, Uber had to face stiff competition from DiDi Chuxing - a
domestic company that provides ride-hailing services via mobile phone applications.
To catch up, Uber had to invest in a large amount of money, lost a total of $1 billion
per year. Finally on August 1 2016, DiDichuxing and Uber China reached a strategic
agreement that DiDi would purchase all assets held by Uber China in the Chinese
mainland. This is also a milestone marking Uber's failure in the Chinese market.
2. Introduce the situation to be analyzed
The reason we choose this case is: Uber is considered one of the most successful
startups of the past decade. However, Uber also encountered many difficulties and
challenges when entering new markets such as China in 2014 and 2 years later Uber
officially withdrew from this market. This case is related to International Business
because Uber operates and provides its services globally, Uber is present in more than
72 countries and up to now Uber has been there for more than 10 years rolling in the
international market. Through researching and analyzing Uber in China helps to better
understand the international business process and the potentials and risks that a
multinational company faces in entering and creating value in the Chinese market.
III. ANALYZE THE SITUATION
1. EXTERNAL
1.1 CULTURE
● Determine the problem

We used 3 factors of Hofstede's Cultural Model consisting of Power Distance,

Individualism & Collectivism, Uncertainty Avoidance to analyze the failure of Uber in
China market.

Hofstede’s framework is widely implemented in management, psychology, sociology,

and marketing studies. This framework is extremely useful in conducting cross-
cultural studies, and to compare cultures across different nations. Hence, this
framework can also be applied to international marketing and consumer behavior
studies (Soares, Farhangmehr, & Shoham, 2007).
 - Power Distance

With a score of 80 on Hofstede’s Power Distance Index (PDI), China exhibits very
high deference to hierarchy and status inequalities (Hofstede Insights, 2023). Yet
Uber’s American operating model reflected much lower PDI of 40 by concentrating
executive decision authority frequently tone deaf to feedback from local managers
who are familiar with local preferences. Disempowerment of on-the-ground expertise
diminished trust, roded trust in leadership directives, responsiveness, and capacity to
align offerings to consumer tastes.

- Uncertainty Avoidance Chinese consumers are more reluctant to take risks.

Although Chinese are using mobile applications a lot, the citizens were holding mixed
opinions about the foreign service providers (Asmi et al., 2016). Chinese consumers
using Uber had mixed opinions, unsure about trusting an unfamiliar, non-domestic
company. This skepticism and caution towards outsider platforms in Chinese culture
hindered Uber's acceptance. Uber faced significant challenges in China due to its
inability to adapt its services to local preferences and culture. Chinese consumers
prefer payment options like WeChat Pay and Alipay. However, Uber insisted on credit
card payments, sticking to its global model and ignoring these preferences.
Additionally, Uber's reliance on Google Maps instead of the popular Baidu Maps in
China further widened the cultural mismatch. Riders would gravitate toward
maintaining use of the status quo Baidu Maps they were comfortable with rather than
adopting the unpredictability of a new Google Maps-based service. These factors,
among others, contributed to Uber's rapid failure in the Chinese market.

- Individualism vs Collectivism

Individualism refers to a preference towards a society wherein individuals are more

inclined to looking after themselves and their immediate families rather than the
society at large. On the other hand, collectivism describes a society in which
individuals consider themselves integrated into groups. (Hofstede, 2011).
Uber's aggressive strategy worked in individualistic Western cultures, but clashed with
communal Asian values. Asian cultures emphasize social harmony, while Uber barged
into markets brazenly confronting regulators and taxi incumbents. This communicates
disregard for authorities and stakeholders. Collision with collectivist priorities
hindered Uber’s success in Asia, empowering rivals who better reflected cooperative
cultural norms. link

● Describe the approach

Uber strategically adapted its approach in China by implementing specific measures

related to payments, partnerships, and mapping services. Initially, they transitioned
from credit card payments to integrating with Alipay, China's popular mobile banking
service, aligning with the preferences of Chinese consumers. Additionally, instead of
relying on Google Maps due to China's internet policies, Uber China opted for Baidu
17 Map. This decision was coupled with a partnership with Baidu, allowing users to
access ride bookings through Baidu's platforms, leveraging their substantial user base
of 240 million monthly active users on Baidu Map and 500 million on Baidu Mobile
(Millward, 2014).

● Evaluate the approach

Uber's initial strategy in China demonstrated inadequate cultural adaptation, refusal to
align with local consumer preferences, and lack of partnerships - missteps that
ultimately facilitated its rapid downfall. As a foreign entrant disrupting an established
market, Uber should have prioritized localization from the start. However, Uber was
slow to offer predominant payment platforms like Alipay or adapt its service beyond
its globalized model to match unique Chinese user expectations for ride-hailing apps.
Only after falling irrevocably behind did Uber pursue necessary adjustments like
integrating Alipay, establishing a partnership with Baidu, and leveraging its vast built-
in user base - but it was too little too late.

1.2 COMPETITORS
● Determine the problem

Even though Uber is already the largest ride-hailing service globally, when entering
China they still have to find ways to compete city by city with Didi, which is already
present in more than 400 cities compared to 60 cities by Uber.

- Support from large corporations

Didi itself is also backed by two other powerful Chinese corporations, Tencent and
Alibaba, Apple. Didi announced that it has $10.5 billion USD on hand after receiving
investment from large Chinese technology corporations such as Alibaba and Tencent.
Meanwhile, Uber received just over $1.5 billion USD from state banks, Baidu and
other investors, valuing the company at about $8 billion USD. These synergies further
enhanced Didi's competitive position and made it more challenging for Uber to match
its offerings.

- Market share

With 2 billion USD of investment, mainly due to supporting drivers in marketing and
promotional activities and providing cheap ride services, attracting users and drivers in
cities, Uber still failed to gain market share from competitor Didi Chuxing. In June
2015, Didi was reported to have an 80.2% market share, outperforming Uber's 11.5%.
This shows that Didi has a huge competitive advantage over Uber, as it has a large
customer base, a diverse network of drivers and a flexible booking system. Uber can
hardly compete with Didi in terms of scale and efficiency.

- Pricing

Uber positioned itself as a luxury brand with a variety of high-end vehicles and
services. However, this strategic focus on the premium segment did not align with its
service operations, leading to mismatches.

On the other hand, Didi has deployed a strong competitive pricing strategy to attract
users and drivers. They have adopted price reduction and even loss-making tactics to
build a strong presence in the market. For example, in 2015, Didi announced that it
would invest $1.1 billion in a two-year promotion, reducing ticket prices to
uncompetitive levels for rivals. This has put great pressure on Uber, especially as Uber
has tried to increase prices to make a profit. Didi's pricing strategy contributed to
making the market unbalanced and hindered Uber's ability to compete. Beside that,
DiDi focused on low-cost services that substitute for taxis. This approach was more
relevant to Chinese users, leading to higher user recognition and recommendations via
word-of-mouth.

According to a 2023 Reuters report, Didi has a lower cost than Uber, as it has a more
local market approach, a more efficient management system and a better relationship
with parties. Uber has to spend a lot of money on advertising, promotions, customer
support and negotiating with government agencies. This reduces profits and increases
financial pressure for Uber.

● Describe the approach

Faced with difficulties competing with Didi in China, Uber has implemented a number
of strategies to improve its position.
Uber has focused on scaling its operations. They already operate in 10 major Chinese
cities and plan to significantly increase their staff force. This shows Uber's
perseverance and determination in conquering the Chinese market.

In addition, Uber has conducted a campaign to reduce fares and major promotions to
attract users. For example, Uber’s carpool service, with fares as low as Rmb2 (21
pence), accounts for more than a significant portion of their business

However, the application of low fares has led to recording large losses and dissatisfied
drivers.

● Evaluate the approach

Uber's method of expanding its operations in China can be considered a bold and
ambitious strategy, but it also has many risks and difficulties.

Advantages: Uber can also take advantage of the potential of the world's largest
passenger transportation market, with more than 1.4 billion people and more than 300
million people using ride-hailing applications. Uber was also able to create awareness
and credibility for its brand, and attract many new users and drivers.

Disadvantages: This method also requires Uber to invest a lot of capital and human
resources, and withstand a lot of losses due to subsidies and operating costs. Uber also
faces many legal, security and cultural issues when operating in China.

Based on actual results, it can be seen that this method did not bring many benefits to
Uber, and Uber eventually had to withdraw from this market.

1.3 LEGAL
● Determine the problem
China is one of the countries which applied civil law systems, which are based on hard
rules and are less likely to change. This has made it difficult for Uber to expand and
develop in China. Specifically, Uber has faced with challenges of government policies
and regulations

Before Uber entered the Chinese market, there was no rule of law in most areas of
China to restrict the development of the mobile travel industry. So before establishing
unified legal rules, enterprises like Uber could make profits through the pricing
method of regional discrimination. On July 28, 2016, the General Office of the State
Council of China issued "Guiding opinions on deepening reform and promoting the
healthy development of the taxi industry". For the first time, it also introduced Internet
special cars into the management of booking taxis, clearly stating the position of the
taxi industry and supporting the companies with booking taxi platforms for continuous
and innovative development.

Under the new regulations, foreign enterprises like Uber will have to suffer some
constraints:

- The data collected by Uber would come under the purview of the government.
- There would be no more subsidies.
- Market prices would prevail, the regulations state, “except when municipal
government officials believe it is necessary to implement government-guided
pricing.”
- According to Xinhua, ride-hailing companies would be urged to merge with
taxi companies.
- Uber would have to get both provincial and national regulatory approval for its
activities anywhere in China.
- Online and offline services would be regulated separately.

Therefore, Uber faced very serious legal repercussions.

● Describe the approaches

Although Uber has tried to use many measures to reduce negative influences of both
external and internal factors, those actions have not brought significant results to Uber.
Therefore, Uber had to make the final decision that no one expected, which was to
merge with DiDi - a large domestic ride-hailing company in China.

In July 2016, after 2 years of spending about 2 billion USD in China, Uber announced
a merger agreement with Didi Chuxing. In a deal, that would value the combined
company at $35 billion.

Uber Global will receive 5.89 percent in the combined company with “preferred
equity interest” which is equal to a 17.7 percent stake. Baidu and Uber’s other Chinese
shareholders will receive a 2.3 percent stake in Didi Chuxing, taking the stake in the
combined company to 20 percent. The $35 billion is made up of Didi’s latest $28
billion valuation and $7 billion value for Uber China.

After the deal, Uber will receive 5.89% of the post-merger company's shares,
equivalent to about 17.7% of Didi Chuxing's shares and the leaders of both received
positions on each other's boards of directors.

Under the agreement, Uber China will keep its independent branding and business
operations to “ensure stability and continuity of service for passengers and drivers”.
Didi will also integrate the “managerial and technological expertise” of the two
companies.

Now that both Uber and Didi have merged, under a deal that will see Didi invest $1
billion in cash into Uber, the race in the Chinese market may have come to an end.
Both companies will no longer have to spend billions of dollars just to steal market
share from the other company, now only one company will have a monopoly in the
most important market in the world.

https://www.cnbc.com/2016/08/01/chinas-didi-chuxing-to-acquire-ubers-chinese-
operations-wsj.html

● Evaluate the approach

Advantages: This method shows that Uber knows how to cut losses promptly and does
not continue to invest more money into an unsuitable market. Uber was also able to
retain some interest in China, as I mentioned above. it received a certain stake and
some chairs in Didi's board of directors. Uber could also focus on other markets where
they have more opportunities.

Disadvantages: This method also shows that Uber has lost the battle with Didi. Uber
also suffered many financial and reputational losses due to its withdrawal from China.
Uber also faces competition from Didi’s partners in international markets such as Lyft
Ola and Grab, as Didi has expanded into many countries and partnered with other
partners, such as Lyft, Ola and Grab.

Uber's failure in China is true, but it can be seen as a method of accepting failure and
looking for a way out. Uber is getting out of its China operations at the right time and
at a reasonable price.
1. INTERNAL
2.1. KEY RESOURCES Link Link Link
● Determine the problem
Through incentives, the Uber application has had sudden growth steps despite starting
more slowly than many competitors.
 Picture: Rapid increase in downloads of Uber application on iPhone (Nguồn:
Internet)

In fact, the number of Uber drivers in China is not that many. The more "generosity"
of Uber, the number of fake drivers and orders also increases, drivers and passengers
find ways to bypass this system to get more rewards.

The first way is that they can buy a modified iPhone 5C on Taobao that will show
unique 15-digit identity numbers. These machines have been hacked to work with
multiple phone numbers, and can therefore use multiple Uber accounts at the same
time. They use one phone number to log into their normal Uber account to book a trip,
and use another phone number to log into their driver's account to receive that trip.
 Picture: "Magic" phones on Taobao (Nguồn: Internet)

To legitimize such trips, drivers use the Uber GPS system itself to "streamline" service
requests. For example, the system tells Uber drivers that there is a normal ride request
waiting for them at the airport, so they fake another ride request from their current
location to the airport. So the drivers have both money from virtual trips and money
from real trips without fear of being exposed.

Secondly, some Chinese newspapers reported that Uber drivers went to WeChat to
find people to help them make trips. These "helpers" just sit at home, turn off the
location feature and request a pick-up at a location right near where the Uber driver is
parked. This driver then accepts the request, and then makes the trip without the
passenger. The driver then receives the reward and shares it back with the "helper".
The cost for each help is about 1.6 USD.

Thirdly, Uber drivers have registered multiple Uber accounts to enjoy more of the
first-time incentives the company gives drivers. Although Uber will recruit drivers
through checking ID cards and driver's licenses performed by a third party. But a black
market has emerged on Taobao to support Uber scams. For a very small cost, only
about 1 USD, users can access an account that can register as a driver.

By falsifying trip bookings, almost every kilometer traveled by drivers will be paid by
Uber. That way, they both receive money from moving and are rewarded for good
moving performance.

This may affect the issue that Uber is having trouble with today: Safety. Uber affirms
that its rides are safe because the company always knows the drivers' records.
However, what is happening in China proves the opposite.
 ● Describe the approach

Uber has begun applying new regulations and using a specialized team to detect and
detect fraud on the system. The penalty for cheaters will be permanent cancellation of
the right to join Uber's service.

In order to make Uber a little bit safer, the company is releasing a facial test for its
drivers across China. When new drivers sign up for accounts, the software will take a
photograph that displays the driver's face clearly. Later on, the app will run periodic
facial recognition tests to make sure that the person behind the wheel is the same
person who created the account.

Uber fights back by creating a database of IMEI numbers, which are unique to a given
phone, and thus allows the company to identify a scammer even after they had reset
their phone. Although Apple hid this number from developers starting in 2012 for its
users’ privacy, Uber still uses the support of a 3rd hacking company to gain access.
Apple has warned Uber to stop or it will remove the Uber app from the App Store.
Things weren't going well for Uber. It faces massive fraud, trouble with Apple, and
over $1 billion a year in losses.

● Evaluate the approach

2.2 KEY ACTIVITIES

a. Marketing link
● Determine the problem
Uber uses the same type of approach to many different markets, including China. That
is: appearing to cause a stir and then triggering a price war. But the results were not
feasible, Uber still could not fight in the market even though the consultants had
burned more than 2 billion USD. The power of this business model is really
ineffective in China.
Uber's failed marketing strategy is partly due to the difficulties in entering the Asian
market, even in terms of legal and cultural issues. On that side, the conditions leading
to Uber's failed marketing strategy are still at the edge of competition, Uber directly
confronts Taxi companies, this causes Uber to make enemies with a group of behind-
the-scenes interests, causing Extreme pressure on the Taxi Association and urban
movement. On the other hand, Asians, especially China, are still accustomed to
traditional taxi calling, so it is difficult for Uber to compete and eliminate them
directly.
Uber claimed to have as many drivers in a Chinese city - Hangzhou as London, Paris,
and San Francisco combined, yet doubts lingered regarding the legitimacy of these
drivers.

The company's consistent payments to drivers during promotional free rides

inadvertently created a loophole. This allowed users, pretending to be both driver and
rider, to collude, fabricate rides, and share the profits.

● Describe the approach

Throughout the summer of 2015, an astounding 30,000 counterfeit rides were

documented daily. Uber spent an astounding 40 to 50 million US dollars weekly on
complimentary rides and bonuses in China, reflecting a staggering financial
commitment.

With nearly $6 billion in venture capital, San Francisco-based Uber is doling out
bonuses up to three times the amount of the fare, betting that its meteoric rise in the
US can rival China.

According to business news website iFeng, part of the independent Phoenix Television
group, Uber has been offering generous incentives to drivers who transport passengers
on The People's Uber - as the service is called. corporate peer in China (known as
UberX in most countries). marketplace and UberPop in Europe). According to one
account, Uber gave drivers 300 yuan (about $50) for every 30 trips and 400 yuan for
every 40 trips.

Another driver told The New York Times that he earned $1,000 from Uber in the first
three weeks of May, much of it from subsidies.

Much has been made of the company's recent announcement that it is losing $1 billion
a year in China, but rather than indicating failure, the figure is more likely to highlight
its determination to succeed. companies in this country - speculate on a large scale to
accumulate on a similarly huge figure ratio.

b. Service of Uber link

● Determine the problem
 Table 2 Service Class and Service Offering of Didi Chuxing &
Uber China
Uber encountered hurdles in the Chinese ride-hailing market stemming from
differences between its anticipated outcomes and the actual market conditions. Despite
contending with formidable rivals like Didi and other entrenched platforms, Uber
grappled with outlining its fundamental goals and advantages within that particular
environment. This uncertainty resulted in a setback in the intense winner-takes-all
competition commonly observed in platform-driven sectors.

For example, the contrast observed in services such as 'Uber Black' and Uber's grasp
of the upscale market segment. Despite offering a range of service categories (outlined
in the table), Uber Black was marketed as the company's distinctive edge.
Nonetheless, Uber's assessment of the profitability in this category might have been
overly optimistic compared to their ride-sharing services. Additionally, the affluent
market potential in China could easily accommodate multiple platforms concurrently.

● Describe the approach

Table 3 Daily Order Requests (million) by Service Offering

Classes
Source: Roland Berger (2016 China car-sharing market analysis report)
Initially, Uber rolled out advanced and premium-tier services in the United States and
sought to replicate this approach in the Chinese market. Despite these endeavors,
approximately 92% of service requests predominantly gravitated towards economy
class services, as illustrated in the table. Surprisingly, it was within these categories
(such as Didi Express and People’s Uber) that enjoyed the most advantages from
network externalities.

Although Uber's market share in these categories was smaller, more than 90% of its
revenue stemmed from these services. In contrast, premium options like UberX and
UberBlack accounted for merely 8% of the total service requests. This disparity
between strategic emphasis (on premium categories) and revenue generation
(primarily from services below the premium tier) highlights a notable mismatch. This
incongruity suggests a substantial misalignment between Uber's marketing and
operational strategies, resulting in limited success despite substantial investments in
manpower and financial resources within the Chinese market.

IV. Alternative solution

1. Marketing
Solution: Uber should shift its marketing positioning and messaging to better resonate
with Asian consumers rather than directly confronting incumbent taxi services.
Example: When Starbucks entered the Chinese market in 1999, it struggled as its
American-style cafes failed to resonate locally. So Starbucks pivoted to focus on the
tea drinking culture in China and promoted its stores as aspirational "third spaces" for
socializing. It also incorporated local food options and created novel drinks like green
tea frappuccinos. This local positioning fueled major growth - Starbucks opened a new
store every 15 hours in China in 2017, up from every four days in 2011. By 2022,
China accounted for 18% of Starbucks' global stores.
Evaluation: Uber could highlight benefits like convenience, affordability and
premium experiences to users. Localizing service offerings is also important - whether
payments, vehicles, incentives or premium tiers. However, quality control remains a
challenge with heavy localization. Benchmarking the success of Starbucks in China,
Uber must balance standardization that protects the brand while sufficiently resonating
in each Asian market. If done well, significant growth opportunities exist considering
rising middle classes and urbanization across the region. The keys are shifting brand
positioning for local relevance and forming the right strategic partnerships - rather
than a pure technology focus. The Starbucks example shows this can completely flip
growth prospects from struggle to exponential success in China in particular and the
Asian market in general.
link
2. Research and obey with legal regulations
Uber has encountered many legal problems when operating in China. Therefore,
investing in research and compliance with Chinese regulations is a long-term and
necessary solution for Uber to operate successfully in this market. Uber should create
a separate legal department for the Chinese market, including experts, lawyers,
researchers... with experience and understanding of Chinese legal regulations. This
department will be responsible for researching, updating and applying appropriate
regulations, and will resolve legal issues related to Uber in China.
+ Uber will gain respect and trust from customers, partners and government
agencies. Uber will not be considered an illegal transportation service and
suspended as before
+ Uber will reduce risks and costs arising from fraud, claims, lawsuits, fines,
compensation... Uber will not face incidents such as being sued by traditional
taxi companies, being denounced by drivers, being banned from using the
credit card payment system.
+ Uber will increase efficiency and effectiveness in business operations. Uber
will not be interrupted or stopped due to legal issues.
Example: Tesla in China - a company that produces electric vehicles at a factory in
Shanghai, established a separate legal department with "Tesla Legal and Compliance
Department" in 2018 is responsible for advising and supporting Tesla in all legal
matters. Tesla has faced some challenges and controversies in China, such as
regulatory hurdles, consumer complaints, quality issues, and competition from local
rivals. In April 2021, a woman staged a protest at the Shanghai Auto Show, claiming
that her Tesla’s brakes had failed and caused a crash. Tesla's legal department has
cooperated with Chinese regulators, to explain and clarify the safety and quality issues
of Tesla vehicles as well as provide relevant evidence and documents. And finally the
court ordered her to delete comments that damaged Tesla's reputation on her social
networks, pay 2000 yuan (280 USD) to Tesla as compensation for damages, and pay
legal fees. 25,390 yuan and 20,000 yuan (2,800 USD) to evaluate the car. tesla
Through the case of Tesla, we can see the importance of having a legal department in
China. A legal department will help a company research, update and apply appropriate
regulations, and resolve legal issues related to the company's business, products, and
customers, protect the company's rights and reputation against consumer complaints
and denunciations, as well as provide reasonable remedies and compensation for cases
of company error.
3. Balance between strategy and profit
Uber China is mainly positioned in the high-end market. Its high-end and private car
services provided by Uber Black for users was the core competitive business of Uber.
According to the data, in 2015, the daily order request for People's Uber, UberX
accounts for more than 90%, while its main business, Uber Black, only brings 8% of
demand orders. This means that the high-end market in China can't return the recovery
rate that Uber wants, which leads to the inconsistency of Uber's strategic focus and
actual profit focus. Limited to the strategic focus, the expansion cities of Uber are
mainly distributed in the first-tier cities. In the second quarter of 2016, Uber operated
in fewer than 40 cities in all of China. Didi, at the beginning, showed that more than
80% of people would like to choose economic traveling, meaning the replacement of
taxis. Economic travel together with user subsidies helped Didi obtain a huge market,
reaching more than 400 cities. Uber and Didi both provide multiple levels of service to
different demand groups. For the economic travel users who make up more than 90%
of the order volume, the collection standard of Didi is 5%, while that of Uber China is
0%. For UberX, which provides a higher end service, the collection standard of Uber
China is 20%. From this aspect, there is inconsistency between Uber's strategic focus
and profit focus.
Specific solution:
+ Although Uber’s primary customer base is the high-end market in order
to create a dislocation positioning with the domestic competitors. But
Uber should strategically adjust according to the income distribution,
aiming to attract the low end market first and then compete with them.
+ Before making marketing strategies, Uber should conduct detailed
research and in-depth analysis of the current market situation and make
segmentation. Uber can start from their own development strategy,
combined with the actual situation, clear goals, so as to give full play to
their own advantages, and the consumers in China with advantages are
deeply understood. According to the consumers' consumption
psychology and requirements, Uber can develop relevant products and
services.
In 2022, Apple captured 20% of the smartphone market share in China. Apple
successfully balances their strategy and profits by effectively segmenting the market:
Apple has segmented the Chinese market into smaller segments. This helps Apple
target its products and services more effectively to different customer groups.
Through the segmentation and positioning of consumer groups in the market,
combined with the skimming pricing strategy, Apple Inc. has built the high-end image
of iPhone to a certain extent, and brought high profits at the same time. These
consumers who have fashion-consciousness and consumption power can bring in a lot
of profits for Apple in a short time. In addition, it is helpful for Apple to establish the
image of a high-end mobile phone brand, and further attract the middle and high-end
customer groups, so as to improve the profit and increase the sales. (Zeming Wang,
2023)
https://www.counterpointresearch.com/insights/china-smartphone-share/
https://www.researchgate.net/publication/
375551094_The_Marketing_Strategy_of_iPhone_Series_in_Chinese_Market

4. Implications and recommendations for other companies

Uber has realized that continuing to compete can lead to many unnecessary risks and
costs. Instead, they decided to merge with Didi, allowing them to keep a significant
stake in the company and continue to benefit from the Chinese market without facing
fierce competition. The important lesson from Uber is that every business needs to
know when to give up. Sometimes, accepting reality and looking for another approach
can bring more long-term benefits than continuing to face unnecessary challenges.

The socio-cultural challenges Uber faced in China demonstrate that foreign companies
must prioritize understanding and adapting to local cultural norms and preferences in
order to succeed in this market. Aligning offerings and business models with local
preferences rather than imposing mismatched global models. Conduct in-depth
research on cultural values, consumer behaviors, preferences and norms. Partner with
local Chinese celebrities, KOLs and platforms for marketing campaigns. Produce
targeted ads for sites like Baidu, Weibo and WeChat.

In terms of the unsustainability of China's infrastructure model, over-reliance on

government lending leads to solvency risks and funding gaps as revenues decline,
jeopardizing development. Companies should pursue joint ventures, strategic
investments to mitigate risks and leverage outside capital, networks and expertise to
share the risks inherent in entering new Chinese markets. Implement flexible
manufacturing strategies and diversify production across multiple. Moreover, they
should assess the infrastructure landscape, including density, transport, internet and
infrastructure relevant to operations and also factor conditions into supply chains,
locations when implementing business strategy
V. Implications
Uber has realized that continuing to compete can lead to many unnecessary risks and
costs. Instead, they decided to merge with Didi, allowing them to keep a significant
stake in the company and continue to benefit from the Chinese market without facing
fierce competition. The important lesson from Uber is that every business needs to
know when to give up. Sometimes, accepting reality and looking for another approach
can bring more long-term benefits than continuing to face unnecessary challenges.

The socio-cultural challenges Uber faced in China demonstrate that foreign companies
must prioritize understanding and adapting to local cultural norms and preferences in
order to succeed in this market. Aligning offerings and business models with local
preferences rather than imposing mismatched global models. Conduct in-depth
research on cultural values, consumer behaviors, preferences and norms. Partner with
local Chinese celebrities, KOLs and platforms for marketing campaigns. Produce
targeted ads for sites like Baidu, Weibo and WeChat.
In terms of the unsustainability of China's infrastructure model, over-reliance on
government lending leads to solvency risks and funding gaps as revenues decline,
jeopardizing development. Companies should pursue joint ventures, strategic
investments to mitigate risks and leverage outside capital, networks and expertise to
share the risks inherent in entering new Chinese markets. Implement flexible
manufacturing strategies and diversify production across multiple. Moreover, they
should assess the infrastructure landscape, including density, transport, internet and
infrastructure relevant to operations and also factor conditions into supply chains,
locations when implementing business strategy

VI. Conclusion
One of the biggest reasons for Uber's failure in China was the culture. The company
struggled with local regulations, facing substantial barriers imposed by Chinese
authorities. These barriers included mandates for local partnerships, data storage, and
pricing structures. With adequate preparation, these challenges might not have sealed
the company's fate. However, Uber's downfall in China was also rooted in its inability
to adapt to local customs and consumer preferences. Chinese users favored in-app
payments like WeChat Pay or Alipay, localized services, and tailored promotions—
needs Uber's global model didn't cater to effectively in the Chinese market. Uber's
success in individualistic Western societies clashed with Asia's communal values,
emphasizing social harmony. Their confrontational market entry in Asia signaled
disrespect for authorities and incumbents, hindering their success and empowering
culturally aligned rivals who embraced cooperative norms.

Compare with other multinational companies that have been successful in the
Chinese market

An American multinational company that is successful in the Chinese market is: KFC.
The company achieved success by abandoning the dominant logic behind its previous
growth in the US: limited menus, low prices and an emphasis on takeout.
Like every other multinational company in China, KFC has learned through trial and
error. KFC China executives believe that the company's U.S. model, while good
enough to work in China's major cities, will not deliver the level of success the
company wants . They understand that in China, food is inseparable from national and
regional cultures, and a richness of flavor and atmosphere is needed to appeal to a
wide range of consumers.
- Bringing Western brands with Chinese characteristics:
● They have expanded their stores, twice the size of stores in the US, so
customers can use them on-site. They have made special efforts to welcome
 families and large groups of customers. Whereas in the US, KFC stores are
designed primarily for takeout — most eating is done at home.
● KFC China's menu typically includes 50 dishes, compared to about 29 dishes in
the US. Menu variety adds foot traffic and encourages consumers to return.
KFC has researched local tastes and added dishes familiar to Chinese people to
its menu. The menu includes spicy chicken, rice, soy milk, egg tarts, fried
dough, rolls with local sauce and fish and shrimp burgers on fresh buns. The
company also changes recipes and spiciness levels to suit each region's taste.
=> KFC really did a good job of research when entering new markets. That is also
something that Uber has not been able to do since the first days. Uber was too
subjective when applying its successful model in the US to the Chinese market. What
Uber lacks is localizing its services in new markets.
- Service staff training: New staff work under the guidance of experienced
people in existing stores; After training, they move to a new store and continue
that job.
=> From there, KFC ensures a source of quality, well-trained employees even though
the majority of employees are local people. In contrast, Uber failed to ensure a reliable
source of drivers for its own company and was exploited by these drivers for personal
gain.
- Rapid expansion: KFC has approached the Chinese market at a rapid pace, the
time needed to open a new store is only half that of the US. KFC's move into
China has allowed the company to widen the gap between itself and its
competitors: McDonald's has one-third as many stores and a 16% market share.
=> This is also something that Uber has not been able to do when it failed to acquire
Didi in 2013 when this company was worth only 60 million USD and had not captured
more than half of the market share in China.

Much of what KFC has achieved is the success of its localization strategy. An
important lesson Uber needs to learn from KFC's experience in China is that when
entering an emerging market, a multinational company must clearly research that
market to adjust its business model. business accordingly and decide whether the
company's mission is to rapidly increase sales or establish a long-term presence. If it is
there for the long term, the company should develop local managers whose vision is to
build an organization that fits the local culture and is stable over the long term.
Link Link Link

Should Uber return to the Chinese market?

Uber made the decision to accept defeat and sell itself to Didi Chuxing in 2016 and get
back 20% stake in Didi Chuxing. This can be seen as an effort to cooperate and avoid
unnecessary disputes in a fiercely competitive market like China.
Uber should consider focusing on other markets instead of returning to China, where it
can gain a greater competitive advantage and maintain stability in its global business
strategy. In a context where the Chinese market has become fiercely competitive and
saturated, choosing a market with high growth potential and less competition can be a
creative strategic decision. Focusing on new markets offers more opportunities than
returning to the Chinese market. Some new markets may be in a period of strong
growth, where Uber can build a leadership position from scratch without having to
compete with major players.
Another important factor is trust and preference for using domestic services. Chinese
users tend to trust and prioritize using local services. Companies like Didi Chuxing
have built a strong brand and created trust among Chinese users through their scale
and influence. It will be difficult for Uber to compete with this preference and seek to
build trust and confidence among Chinese users.
Therefore, Uber returning to the Chinese market is not a wise choice.