There’s a paradox in today’s world of mass consumption. People are more inclined to need products and services, yet they have less desire to actually buy them. This trend can be seen in many corners of the world, but it is most prominent in Southeast Asia where a great number of the world’s population occupies a small land area. Uber has proven itself to be a rising star and is leading in the ride-hailing arena. The company has announced big plans to expand into China to prove itself as an even bigger presence in its industry.
Why is Uber so Successful? The Worldwide Trend of Usership
The global trend mentioned above is called the shift from ownership to usership, giving rise to what many experts call the sharing economy. The concept is simple: in the occasion that a person needs to do something, instead of going out and buying the “resource” required to do said action, he/she is able to “share” the resource with someone who already has it by paying compensation.
A perfect example of this trend is Uber. Without the need to own a car, anyone with a smartphone can digitally hail a taxi along with a driver. Both parties benefit – you get to where you need to go and the driver gets compensated for his or her effort.
A shift to usership can be seen not only in the transport industry, but also the hotel industry and services industry. An honorable mention here is AirBnB which connects home-owners willing to rent out their living spaces to tourists who are looking for something more homely and cost-effective than hotels.
Uber’s Grand Plan to Expand into China
However, coming back to Uber, the giant ride-hailing company has announced plans to become even bigger. So far, Uber has already been on a massive expansion plan. In China, it has an incredible amount of promotion and free rides that caused it to incur a loss of over US$1 billion in 2015.
The company’s management’s called it an “investment” and not a loss during a press conference earlier this year, which left many shareholders confused. But since then, the investment has come to light since it has helped them gain them 30% of the total market share in China, compared to 2% a few years back. Yet Uber still faces tough competition from local competitors such as Didi Quaidi, which raised US$2 billion last year.
With an upcoming strong foothold in the Chinese ride-hailing market and in trying to outgrow its local competitors, Uber has announced plans to enter a partnership with Alipay, China’s largest mobile wallet. Not only will this make it easier inside of the country to pay for rides, but it will also mean that Chinese Uber users abroad will no longer have to link dual-currency credit cards to be charged in USD.
The strategic alliance reaches out to nearly half of China’s population, as Alipay has over 450 million active users. An Alipay executive said that the added convenience the deal will give Chinese people abroad a deciding factor leading to the partnership. “You don’t have to worry about whether you have enough local cash to pay for your rides. All you need is to open your Uber app, find a ride, and pay with Alipay,” he said.
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