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December 18, 2014

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Potential sees Baidu invest in Uber

BAIDU Inc said yesterday that it will invest in Uber Technologies Inc, a US-based car-booking firm, joining two other top Chinese dot-com firms which have invested in the sector.

Under the deal, Baidu will connect its map and mobile-search features with Uber’s service. Baidu is the biggest online and mobile search provider in China with more than half the market share. It has more than 240 million Baidu Map users.

But Baidu and Uber declined to reveal the investment figure.

“The car hailing industry is still in the early stage of development. It’s a huge market and has a lot of potential,” Robin Li, CEO of Baidu, said at a press conference yesterday in Beijing.

“A lot of startups and big companies like Baidu, Alibaba and Tencent all want to achieve something in this industry.”

By cooperating with Baidu, Uber will expand rapidly in China, industry insiders said. Uber is now available in nine cities in China including Shanghai and Beijing, and this will rise to 14 cities soon.

Uber, though, is a comparative latecomer in China, where taxi app users are set to triple to 45 million by 2015 compared with 2013, according to Chinese research firm iResearch. Rivals include Hangzhou Kuaidi Technology, a taxi-booking service backed by Alibaba Group, and Didi Taxi, invested by Tencent. Kuaidi and Didi have 90 percent of the market sewn up.

Kuaidi is already in over 350 cities. Didi said on Monday that it has completed the latest fundraising of US$700 million, with investors like Singapore’s Temasek and Russia’s DST.

“China is the Holy Grail because it is both elusive and attractive at the same time,” said Kumar Saha, an automotive and transport analyst at Frost & Sullivan.

Compared with local rivals like Kuaide and Didi, Uber offers luxury car and English services (with some drivers), targeting high-end people.

But Kuaide has added a luxury car booking service in China in July.

Baidu is the latest big-name investor in Uber, joining the likes of Goldman Sachs and Google Inc, to place a bet on the fast-growing transport company, now valued at a hefty US$40 billion.

But Uber’s aggressive growth has already been accompanied by negative publicity over some of its business practices and bans in some countries. For example, New Delhi has banned the company after one of its drivers was accused of raping a passenger.

Uber Chief Executive Travis Kalanick said the firm was not facing any “pressing regulatory issues” in China, but analysts warned domestic regulation would be a steep hurdle.

“Any fault in complying with law will be damaging. With or without these incidents, the government will exert their control,” said Klaus Paur, global head of automotive at Ipsos.

Baidu’s investment may help smooth the process, according to analysts.



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