Uber is struggling in expanding its market share in China, burning $1 billion a year as competition with local ride-hailing rival Didi kuaidi.
But Travis Kalanick, chief executive officer of Uber, is still optimistic that Uber will beat its competitors, as they are able to cover the lost using the profits from other countries.
US-based Uber started to operate in China in 2014 and competed against the country's largest taxi app Didi Kuaidi. Uber’s China unit raised more than $1 billion in its latest funding round with a total valuation of more than $8 billion. Its investors include Goldman Sachs, TPG, Fidelity and Russian billionaire Mikhail Fridman.
“We're profitable in the USA, but we're losing over $1 billion a year in China," Mr Kalanick told Canadian technology news site Betakit. "We have a fierce competitor that's unprofitable in every city they exist in, but they're buying up market share. I wish the world wasn't that way."
According to CNBC, a Didi’s spokesperson replied on Mr. Kalanick’s comments, saying that its business had reached break-even in more than half of the 400 Chinese cities in which it operates.
"We wouldn't be here today if it wasn't for burning cash," said Jean Liu, Didi Kuaidi's president, last September.
China’s Didi Kuaidi, backed by Chinese technology giants Alibaba and Tencent, had raised more than $4 billion so far. The Chinese ride-hailing company also expanded its business globally, partnering with Uber's rival Lyft in U.S. and Grab in Southeast Asia.
Uber and Didi Kuaidi both spent heavily on subsidies to drivers and riders in order to gain market shares in China.
"I wish the world wasn't that way. I prefer building rather than fundraising. But if I don't participate in the fundraising bonanza, I'll get squeezed out by others buying market share," Mr. Kalanick said in his interview.