Uberisation in China: Chinese champions opening up opportunities

By May 25, 2016

Chinese companies have not waited for Uber to become a dominant force before embarking on the ‘uberisation’ process. The B2C business model has already started to cede ground to a C2C approach in China.

Peer-to-peer business models are already up and running in China. Two recent events illustrate how things are speeding up in this direction.

Transportation: Apple recently announced that it was making a billion dollar investment in Beijing-headquartered transport networking company Didi Chuxing. This Chinese competitor to Uber – which has also taken a financial stake in Lyft – boasts 300 million subscribers and operates more than 11 million journeys a day in over 400 Chinese cities through its booking system for both taxis and private cars. Some of the growth achieved by this highly astute Chinese champion is due to the partnerships it has been forging in each major city, incorporating local taxi firms into its system – something for European players to think about perhaps.

Page d'accueil de Didi Chuxing

Didi Chuxing homepage

In fact Uber has been gaining ground in China but has not yet progressed beyond a 10-15% market share. One of its noteworthy investors is the ‘Chinese Google’ – Baidu, which has so far invested $1.2 billion in the ride-hailing platform and has also just announced the launch of a research unit focusing on autonomous vehicles.

Finance: Notwithstanding the scandals and disappointments surrounding a number of startups, the Customer to Customer (C2C) approach has been making headway as regards both payment methods and peer-to-peer (P2P) lending. Fighting for a share of this booming market are both digital ‘pure players’ and some traditional financial sector firms who have embraced the changes in consumer habits. Private sector insurer Ping An – which showed great daring in launching a P2P online finance marketplace platform called Lufax back in 2011 – today boasts a valuation of some $18.5 billion.


Graphique de services de Ant Financial

Services offered by Ant Financial, a subsidiary of Alibaba

Meanwhile one of Lufax’s competitors, Alibaba group subsidiary Ant Financial, has just raised $4.5 billion in capital to support the development of its financial services in remote areas of China and other parts of Asia, where a large part of its business is done on a C2C basis. Ant Financial runs Alipay – China’s most popular online payment service, which was originally set up to process payments on Alibaba e-commerce sites – a third of whose 450 million users use it to make C2C payments. A year ago, in July 2015, its P2P loan platform Zhao Cai Bao already numbered over 7 million users.

The potential opportunities arising from this phenomenon are many. While small players are latching on very quickly to these new platforms, the majority of medium-sized and larger firms are also looking at the feasibility of creating their own platforms or becoming partners of the Chinese web giants, either with a view to obtaining revenue from an entirely new market – which is what a number of Chinese retail banks such as China Minsheng Bank are doing – or by shaking up the status quo in the retail sector. Many B2B players are now starting to place their hopes in a B2B2C approach, looking to gain a slice of the new value opportunities by re-shaping the traditional B2C distribution chain.

In fact it looks as if uberisation in China is uberisation at its best!

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