Chief Executive of Uber Technologies Inc., Travis Kalanick has stated that the company is achieving more than $1 billion in profit every year coming from its top 30 locations worldwide, with a portion of that revenue being invested in the company’s plans to take-over the Chinese market.
The company stated in February that it was failing to achieve nearly more than $ 1 billion every year in China’s ride-hailing market, which is in extremely high demand, due to the competition from bigger local companies.
Kalanick stated that China holds the company’s most prominent market and that it was an essential place to test their innovative ideas that it has conveyed to different markets, and also that the company’s investment in the country was worthwhile.
He further added:
“If you took our top 30 cities today, today they’re generating over $1 billion in profit a year, just our top 30 cities. And that profit multiplies every year because we’re growing.”
He also said that in other cities which were among the 400 that Uber is currently functioning in, they are too making profits.
He said on Thursday:
“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.”
Uber and China’s company Didi Kuaidi, which has been supported by Chinese technology firm Tencent Holdings Ltd. and Alibaba Group Holding Ltd., have collectively reduced their fares in order to acquire a part of the market stake, while relying on China growing as the world’s largest market for transport via the internet.
This strategy seems to be working in favor of Uber so far and the company’s market stake in China has expanded rapidly, growing from about 1 per cent to 2 per cent in January 2015 to around 30 per cent at present.
China’s transport minister stated early this month that the subsidization of fares and improvement in the wages of drivers for the ride-hailing companies is appearing as very unfair, and is not durable over a long period of time.
The company which was founded in 2009 and based in San Francisco, California has started to test new products in China, one example being, UberCOMMUTE which is a carpooling app introduced last September and was first trailed in Chengdu, later becoming popular in other places.
“The key for (us in) China is to move fast.”
He also added on the issue of the stiff competition in China:
“If we launch in the U.S. and then it gets copied in China, we’ll be behind. So we’re starting to orient some of our innovation at China first.”
Chinese business for the company was evaluated in January to be at more than $8 billion, after investing more than $1 billion from its funding.
Kalanick stated that, until now, Uber was not challenged with major regulations in China, probably due to the fact that the government is endeavoring to push forward the innovation of Uber.