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Uber Ready to Take on Didi Kuaidi Challenge

| Nov 27, 2015 07:31 AM EST

San Francisco-based Uber has announced a plan to invest $1 billion in the country and set up an independent China branch in Shanghai.

Uber is now ready to take the challenge of its competitors after Liu Zhen, the "strategic officer" who oversees the company's China operation, said that the San Francisco-based company is transforming into a localized firm with many Chinese investors, as well as China-specific products and a local management team.

"Uber is fully localized in China. Since other Chinese Internet companies also receive overseas investment, we are no different from them in capital levels," Liu said.

In October, Uber also announced a plan to invest $1 billion in the country and set up an independent China branch in Shanghai. Uber and its China subsidiary also said that it will soon release the names of Chinese investors.

The company said it will name its China CEO, although it did not announce the date. Liu joined the company in April and currently leads the operation in China.

China Daily reported that Uber China is seeking expansion in 2016 as it is facing tough competition with Didi Kuaidi and other players for passengers and drivers.

At present, Uber operates in 21 cities, while Didi Kuaidi, backed by tech giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd, is operating in more than 100 cities.

According to Liu, Uber will be targeting cities with more than 2 million population next year and there are at least 250 cities that fit the size in China.

The company said that over the past nine months, its market share in the chauffeur services sector rose from 2 percent to 35 percent. Didi Kuaidi, on the other hand, also claimed to have taken a majority share. However, both claims lack third-party support.

More than 80 percent of the market share was taken by Didi Kuaidi, while Uber controlled 16 percent at the end of the third quarter, according to Analysys International, a research firm that tracks the online car-booking market.

Didi Kuaidi's high market share was attributed to its large taxi driver base, a sector that does not belong to chauffeur services.

For Uber, Didi Kuaidi and their competitor, the biggest challenge is still the regulators' uncertain attitude toward car-hailing apps, Zhang Xu, a researcher from Analysys International, said.

Last month, a draft regulation was published by the Ministry of Transport which requires private cars to undergo a stringent registration process before being given access to car-hailing apps. The draft drew widespread criticism.

Liu said that both app providers and the regulators will need a less strict alternative solution to resolve the disagreement, which she admitted would be a time-consuming process.

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