Last month, Uber CEO Travis Kalanick confirmed what many suspected: The ride-hailing company is burning cash in China. “We’re profitable in the USA, but we’re losing over $1 billion a year in China,” he said at a ”fireside chat” in Vancouver.
Alarmed? Don’t be! Kalanick tells Reuters in an interview published Friday (March 25) that Uber’s China investments are being made “sustainably.”
“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,” Kalanick said. “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 currently operates in 400 cities in 59 countries.
Uber is spending heavily in China to compete with Didi Kuaidi, a local rival valued at $16.5 billion and backed by Chinese Internet giants such as Tencent Holdings and Alibaba. Didi operates in 400-plus cities in China, and has said it breaks even in more than 100 of them. It’s believed to dominate China’s ride- and taxi-hailing market, though Uber and Didi disagree by how much. In February, several news outlets reported that Didi wanted to raise another $1 billion at a $20 billion valuation.
China’s highly congested, densely populated cities offer Uber its biggest growth potential, and last summer Kalanick said expansion there is Uber’s “top global priority.” His skeptics are plentiful. The brash tack Uber has taken elsewhere in the world may not sit well with Chinese authorities. China is a notoriously difficult market for foreign internet companies to crack. Uber has said it plans to be in 100 Chinese cities by the end of the year.
Per Reuters, though, Kalanick likes Uber’s underdog status.
“I was in China 70 days last year and 100 times a day someone would say ‘Travis, no Internet technology company has ever succeeded. I don’t know if you should be here,’ ” he said.
“As an entrepreneur, that’s the best thing you can hear … you’re always turning it into the positive, and trying to make the impossible possible is what we do. Adventure with a purpose is what we do.”
Hopefully his investors agree.