China Internet Watch

Didi the local car-hailing app is the biggest rival of Uber in China

CIW Team — Tue, 21 Jun 2016 03:00:54 +0000

Car-hailing apps have over 60% penetration rate across all city tiers and age groups in China. 84.7% users from China’s first-tier cities use car-hailing services; and, they used car-hailing apps 8.7 times on average in the past month according to an FT research.

Over 80% users in 25 to 29 age group use car-hailing apps, and they used it as frequently as 9.1 times in the past month according to FT Confidential Research.

Users’ average monthly spend on car-hailing apps is RMB 181. Users whose annual income is at least RMB 300k use car-hailing apps most, 12.5 times on average in the past month, followed by RMB 100k to 299k income group (7.9 times) and RMB 99k or below (6.6 times).

Didi and Uber are two major car-hailing apps in China. 91.3% respondents listed Didi as top 3 car-hailing apps used while only 35% voted for Uber.

Didi ranked top among five most popular car-hailing apps which are Didi Chuxing, Uber, UCAR, Dida Pinche, and Yongche.com.

Didi Zhuanche, private car service by didi, costs lower than UberX, similar service by Uber.

A common tactic adopted by many internet companies in China is to provide subsidies. Didi announced a total number of 1.43 billion orders in 2015 including taxi, private car, carpooling, bus, test drive, corporate service and other services. And, the total number of registered Didi users had reached 250 million by the end of 2015.

Extended reading: Uber’s battle for China (FT.com)

Uber’s Rival Didi Had 250 Million Users in 2015

CIW Team — Thu, 14 Jan 2016 01:00:17 +0000

Didi, Uber’s China Rival, announced a total number of 1.43 billion orders in 2015 including taxi, private car, carpooling, bus, test drive, corporate service and other services. And, the total number of registered Didi users had reached 250 million by the end of 2015.

Didi merged with Kuaidi in early 2015. And, its business developed quickly in 2015 which made Didi one of the leaders in the mobile car calling industry in China. The number of Didi’s total orders exceeded 200 million in December 2015.

Year 2015 witnessed an explosive increase in users’ demand for car-hailing services especially in bad weather conditions. Calling requests exceeded 1 million on November 23th 2015 when Beijing had a heavy snow weather, eight times as much as the total number of riding trips in New York on that day.

Allowance of drivers was essential for car calling service providers maintaining a large number of drivers. Uber’s CEO Travis Kalanick told in Beijing that Didi spent US$4 billion on driver allowance every year in early 2016 while it was denied by Didi.

Uber China and Didi led China’s car calling industry in 2015. Uber announced 1 million rides as of December 2015. Under the background of car-purchasing restriction policy of some second and third-tier cities, China mobile car calling market is predicted to remain good in 2016. Didi was valued at over US$6 billion in 2015.

Didi rolled out a public SDK this week that enables third-party apps in China to hail a Didi ride from within their own apps. Didi expected to segment services to make it possible for customers share seats in 2016. Meanwhile, Didi planned to open e-commerce business where customers could buy automobiles on Didi mobile app.

Also read: Trend of China’s Automobile Consumption in 2015

China Mobile Internet Insights in H1 2015

CIW Team — Tue, 20 Oct 2015 02:00:35 +0000

Despite the continuous weak growth and even decline in smartphone sales in China, major domestic mobile phone manufacturers still set a “big leap” of shipping target in H1 2015. Although foreign brands iPhone and Samsung still held a large market share, domestic brands as Huawei, Lenovo, Xiaomi and TCL etc. all set their phone sales volume at 100 million units.

In Q2 2015, Xiaomi was the top smartphone vendor in China by total shipments volume of 15.9%, followed by Huawei (15.7%). Apple ranked third, followed by Samsung and Vivo.

China Mobile, China Telecom and China Unicom, the three Chinese telecommunications companies accounted for 90% of the market.

4G network penetrated quickly into Chinese people’s life while users accessing to the internet through Wi-Fi accounted for 52%, mainly because of the high data charges of 4G network.

25% China mobile internet users on average opened less than 5 apps per day while over 60% would use less than 10 apps. Only 2.9% users would open more than 20 apps in one day. Tencent, Alibaba and Baidu still led China’s mobile internet market.

Among the top 20 mobile apps by total number of monthly average users, seven apps were from by Tencent. And among all the mobile apps in China in July 2015, WeChat and QQ ranked first with the monthly average users of 556.48 million and 424.28 million respectively.

WeChat and QQ were the social communication platforms with the highest penetration rate. Among the usage of the top 20 apps, users spent about 27% of the total apps usage time on WeChat and QQ. Search engine, video, and music player apps were also popular among mobile internet users.

Tencent held a strong position in the mobile social platform. Mobile internet users spent more time on WeChat compared with QQ; however among the post-00s, QQ was the major communication tool.

In the mobile video player market, Tencent, iQIYI and Youku led the market, with fierce competition and little gap of MAU (monthly active users) and total usage.

In the mobile music player market, Kugou music undoubtedly took the lead, followed by QQ Music and Kuwo Music.

Tencent News enjoyed a large share in China’s news apps market while Toutiao was in the process of fast penetration. Toutiao and Tencent News were quite close in total usage time. The daily usage of Toutiao was even twice that of Tencent News .

Offers from China online travel providers such as Ctrip and Qunar have extended to provide more on “things to do” in travel destinations. China online travel providers have also expanded to provide lifestyle offers such as food delivery, movie ticketing and car renting. In H1 2015, Ctrip and Qunar continued the growth momentum, which contributed to the tourism market of China.

Resulting from the convenience of online banking and online payment, mobile online banking apps developed quickly. China Construction Bank ranked first with monthly average usage of 2.32%.

China became the largest e-commerce market since 2014. About 53% users were women in 2015. Taobao held an unaltered position in the online e-commerce market, followed by JD and Vipshop.

In the mother care market, Beibei ranked first with an overwhelming advantage, whose monthly average usage was more the sum of other four apps.

Competition was fierce in the cross-border hopping market, and Red ranked first in H1 2015 with a market share of 0.19%.

Meituan still ranked top on the group-buying apps in H1 2015, followed by Dianping and Nuomi while Ele continued to compete and was expected to be competitive to Meituan in the monthly average usage.

Meituan and Ele dominate the food delivery market. Ele led the market in Beijing and Shanghai while Meituan held an obvious advantage in other cities. Beijing made up of nearly 10% of the total food delivery share.

Car calling market was basically shared by Didi, Kuaidi and Uber. Although Uber China made much effort in the localization of Uber, the number of daily average users was only one third that of Didi Cars/Kuaidi One.

WeChat payment has gradually been adopted by more users. Many apps supported payments by WeChat. Didi and Meituan were first two apps that used WeChat payment as the primary payment method.

Also read: China Top 100 Mobile Apps in July 2015

Tough Road Ahead for Uber China

CIW Team — Tue, 22 Sep 2015 00:00:58 +0000

Uber China finished nearly US$1 billion financing from Baidu, China Credit Bank, and other large enterprises in China, which made its valuation approximately US$7.5 billion. However, this hasn’t been confirmed by Uber. Uber has also been financing, and the current valuation is about US$51 billion, surpassing the Chinese mobile phone manufacturers Xiaomi to be the world’s highest valuation of private companies.

Currently, Uber business has expanded to more than 300 cities worldwide with growing popularity; and it transports millions of passengers every day. In China, Uber covered 7 cities in July 2014, and it is expected to expand to 40 by the end of this year and 100 by the end of 2016. The total NPV (net present value) of Uber in China Shanghai, Huangzhou, and Shenzhen has been over US$9 billion.

China is an essential market to Uber, which may make up of about one-third of Uber’s total revenue by late 2015. After nearly two years of accumulations, Uber began to increase in monthly total orders and active users; and the growth rates of those are both about four to five times compared to the global market.

Uber utilizes the popularity of smartphones and GPS positioning to provide a platform for car owners and users, and extracts commissions from orders to gain profits. However, in China, private cars who carry for charges without corresponding operational documents would be considered illegal and would be strictly supervised by Chinese transport control department as the “black car”. Thus after entering China, Uber had to cooperate with car rental companies. Major rivals of Uber in China are Didi, Kuaidi, Shenzhou and Yidao. Didi and Kuaidi got a US$2 billion financing after combination with US$15 billion valuation.

During the rapid expansion, the share model is facing global challenges, including China. The company’s business in China has encountered some regulatory resistance and some conflicts with local taxi industry. Problems such as huge losses, excessive car fare subsidies, scalping, fraud transaction, too much reliance on low-cost marketing, loose verification of the driver and vehicle, and so on, are all existing problems faced by Uber. By reducing the allowance of drivers, fraud orders have decreased; however, to maintain continuous growth, Uber is suggested to further localize its management group to win 50% of the Chinese market and keep healthy and reasonable competition.

Also read：China’s Mobile Car Calling Market from 2014 to 2015

Uber China Valued Over $6 Billion in July 2015

CIW Team — Wed, 29 Jul 2015 03:00:05 +0000

According to Leiphone.com, Uber China recently launched a second round of financing; the company’s valuation is between US$6 billion and US$7 billion in July 2015.

Since entering the Chinese market, Uber China has been developing very rapidly. The growth rate in the Chinese market is far higher than the global average level. Uber currently planned to expand Chinese markets before the end of the year to 40 cities across China; and 100 cities by the end of next year. In addition, Leiphone once reported that Uber may set up a new company in China to achieve better development.

Uber’s transaction in China is expected to reach one third of last year’s total. However, problems such as huge losses, excessive car fare subsidies, scalping, fraud transaction, too much reliance on low-cost marketing, loose verification of the driver and vehicle, and so on, are all existing problems of Uber; in addition, policy changes in each city may also bring Uber China a lot of unknown risks.

And what’s more, the emerging and flourishing of some domestic automobile software in China has, to some extent, blocked the Uber’s development in China, for example, Didi and Kuaidi, and it may face more fierce competition in the future.

The stated problems make many investors have to think about Uber China’s valuation, however, Uber CEO once said that Uber still needed a lot of money to invest into; and, the next three years would have US$1 billion invested in the Chinese market. It would not expect to break even until 2018.

Uber has about 250 markets all over the world, and the total transaction value in global market reached US $3 billion last year. In March 2015 Uber purchased deCarta, a map pioneering company with only 40 staffs. It actively invested in the research and development of new technology.

Also read: 50% China Users Keep Taxi App at the End of Subsidies

Over 200K Taobao Fraud Transaction Accounts Targeting Uber

CIW Team — Thu, 02 Jul 2015 12:00:07 +0000

In the costly-spending O2O field, almost all firms have a grievous history of fraud transactions and anti-fraud transactions. Uber, Didi, and other vehicle calling services have become the trades favoured by many over the past two years, due to their high-profile spending of scores of millions US dollars every day.

The forms of fraud transactions by Uber, Didi, Kuaidi One and other apps are not so much differentiated. But Uber gives the highest subsidies. So both Uber and his counterparts are fraud transactions on Uber; they also persuade “customers” to click farm on Uber. Only when Didi gives the higher subsidy or during the rush hours will he gets part-timing for it.

This also evidences the recent challenges against Uber’s daily order quantity in China. Travis Kalanick, CEO of Uber, says that the daily order quantity in China is close to 1 million, but the overseas media repeatedly challenge the fake prosperity formed due to Uber’s fake orders.

According to investigations, Uber has gone too far in click farm. The single outlet of Taobao has traded 200,000 Uber passenger accounts. As Taobao orders are mostly made by small and loosely-distributed users, a greater number of users in groups make the deal by making phone calls or QQ messaging. The total fake orders by fraud transactions will be presumably up to 1 million in scale.

Disordered Fraud transactions by Uber

“Get 70 orders a week, and you will earn a bottom line of RMB 7,000. With additional subsidy to new car owners, you can get an easy payment of more than RMB 30,000 a month. ” From this April on, Uber has subsidized car owners to such an extent as even stunning the Chinese costly-spending patriarch Didi.

Originally a clerk working for a small firm, Chauffeur Mr. Li found that Uber would earn him an income more than his salary on a monthly basis. Uber as a platform have gathered many chauffeurs like Mr. Li. The high subsidy and low rate helps Uber gain a great success in spite of his much backwardness compared to Didi in the Chinese market.

While a large swarm of car owners are scrambling for Uber, Uber also faces up with lots of click farmers. The media tried to search Tabao.com for the two key words: “Uber” and “优步（Uber in Chinese), finding that the results were all about account trading and fraud transactions. There were more than 200 Taobao links about trading of passenger and chauffeur accounts. Among these links, the firstly appearing ones had a trading volume of RMB 14,000 or so. Most Taobao shops provide a Uber QQ chat platform group.

A reporter from the media bought an inactivated Uber passenger account from the Taobao shops “Uber Home of Car Owners” and “Fish Little Store”, respectively. The shops provided a complete package of information including Uber and Alipay accounts, and mobile verification code, with one click farmer’s textbook as a compliment.

An inactivated Uber account is considered as essential to fraud transactions. Because it contains no record of car use, one can get a new passenger voucher worth RMB 30. In fraud transactions, if the fare is around RMB 30, you can get Uber’s subsidy at almost zero cost. Take Beijing for example, where the subsidy during rush hours will be 2.5 folds of the normal one. In that case, you can earn RMB 100 per order.

“Quite a number of users buy 100 or even 500 Uber accounts in one lot. Some users also ask if they can buy account automatic generators. But this can easily cause ‘poisonous needles’. There are also some cheaper accounts for sale in Taobao.com, but note that some are deactivated accounts that are possibly being frozen”, a customer service clerk from “Uber Home of Car Owners” tells the journalists. The clerk repeatedly tells the journalists that one cannot use the same account to farm click on the same chauffeur’s service twice, and the optimal number of farm clicks is expected to be less than 10.

Even if each account gives 5 farm clicks, “Uber Home of Car Owners” has produced 50,000 farm clicks alone. In Taobao platform, there are at least 15 shops with equivalent trade volumes. Conservatively speaking, there are more than 200,000 Uber accounts sold by Taobao shops for fraud transactions purposes. Some shops even announce that big volume buyers can befriend their QQ or WeChat accounts. It means that some large orders avert Taobao system’s governance and reach a deal by other means.

Diversified means of fraud transactions

QQ Group (group chat account) is a converging place of click farm information. There are scores of QQ Groups directly named after “Uber” or “Didi click farm”, yet differentiated by the prefix – name of a city. Such exclusive QQ Groups are accessible in Beijing, Hangzhou, Wuhan and Nanjing and other cities. Each of the QQ Groups named after “China” or “National” gather nearly 2,000 click farmers.

The perpetual topics dominating these QQ Groups include “Ask for needling (means fraud transactions)”, “Ask for nurse (means click farmer)”, “numerous mobile numbers for sale”, “sell inactivated passenger account, inactivated and much-used chauffeur accounts” and “click farm textbook, no risks” and other click farm tips. There are also discussions on the teaching of skills and the best fraud transactions.

Although click farms are collectively known “needling”, there are as many methods and tricks as beyond your imagination.

The simplest method is to ask your colleagues or friends to help fraud transactions, which is but an occasional behaviour. If you want to pursue long-term click farm, you need to find a click farm professional. A medium-sized team of click farmers may have more than 30,000 inactivated Uber passenger accounts.

A tailored service chauffeur Mr. Wang tells the media that the professionals will help to click farm in different ways. Some are a team who will send four persons to actually sit in each car, each having many accounts; they have “ups and downs” in sequence over the short distances, and with one day’s work, they can creates the expected number of fraud clicks. Others are teams who have virtual operation devices. They can click farm without taking a car. All they need to know is your car registration number and location. They will locate you and then have a virtual drive to form a like order.

Apart from fraud transactions by professions and non-professionals, self-fraud transactions makes up almost more than half of the trade. Usually, a click farmer will buy a mobile phone with modifiable IEME code or own many ones to log onto many passenger and chauffeur accounts, in order to enable “self-needling”. By this means, some click farmer can earn nearly RMB 20,000 every week.

A bigger surprise is that even if you have no car, you can get Uber’s subsidy by fraud transactions. One solution is to buy chauffeur account and information from QQ Group and Taobao shops. Alternatively, you can ask somebody to apply an account for you, who uses fake driver’s license (retouching by Photoshop) for registration.

Another solution is that some professional will provide one complete package of services. All they need are chauffeur account and password; the remaining jobs are automatically done by the computer, such as virtual positioning, auto-drive for order receipt, and passenger-side auto-ordering.

The bittersweet chauffeur

Chauffeurs hold different attitudes toward fraud transactions. Many a chauffeur says that they have ever click farmed, but for different reasons.

As mentioned above, Mr. Lin is a frequent click farmer, who tells the media that fraud transactions can earn you fast money and get things done quickly. On the other hand, he just thinks that his car would have only a service mileage of 100,000 kilometres in two years if the adequate mileage is covered. This is a fast depreciation that is not cost-effective.

Mr. Lin tells the media that there were once many click farmers, and most chauffeurs would do it, Uber couldn’t but let them go unchecked. Now Uber’s rules have changed, and it not worth fraud transactions any longer, especially asking someone to “needle”. That’s why he does it himself now.

Mr. Li and Mr. Wang are chauffeurs who click farm on Uber occasionally, on the similar ground of the increasing quota of tasks for Uber’s subsidy. 85 orders a week means that an Uber chauffeurs has to work six days a week, except the day of non-operation due to vehicle restriction rule, and picks up 15 passengers a days by working 12 hours a day. That’s why they need less burden.

However, some chauffeurs object to the practices of fraud transactions, thinking that their actual painstaking work ends up earning less than those click farmers do. But if an Uber account is frozen due to click farm, it would be better to take the pains of normal work.

They believe that lower-paid as it is, the new subsidy rule can urge them to earn up to RMB 5,000 a week by working harder, a way that is fairer to those who really do.

All Uber chauffeurs, fraud transactions or not, are dissatisfied with the sudden increase in the fraud orders received by mistakes after the enforcement of the new rule of order dispatch. According to the new subsidy rule, if you want a double subsidy, you need both receive the expected number of orders and to execute 60% of them. The cancellation of orders has, however, greatly decreased their number of orders executed.

A war between fraud and anti-fraud

Perhaps, Uber shows both likes and dislikes when being click farmed on. On one hand, fraud transactions means data prosperity in some sense, adding a promoter to their financing campaign. On the other hand, the defrauding of real money from Uber platform lowers the understanding of users’ demand. As for the rampant fraud transactions, Uber is also continuously working out his own anti-fraud rules.

This week, Uber updates his subsidy rules by changing the last week’s minimum subsidy of RMB6,000 for each 85 orders received into the current subsidy being doubled minimum fare. The order dispatch rule also changes from the nearby dispatching to the small-scale random dispatching.

The new rules bring greater “needling” difficulty. The orders of a click farmer can be easily dispatched to non-click farm chauffeurs, and many cancellations may lead to the account freezing by Uber system. The introduction of the new subsidy rule disables the quantity-based fraud transactions, because the specified quantity of orders, if not worth much in total, don’t mean higher subsidy.

In addition, the new version of Uber app has toughened the efforts to free fraud accounts. The great number of short-distance orders, virtual operation, two passenger-orders for the same chauffeur and use of one mobile phone for different accounts will easily cause account freezing. Uber usually works by freezing IEME code of a mobile phone. Once IEME code is frozen, any account cannot run in the mobile phone and then get frozen as well.

Uber’s new rules decrease the practices of fraud transactions. On one hand, the difficulty and intensity of earning subsidy is not so much as before. On the other hand, the account freezing is far stricter than ever. But in the field of click farm, there are a ceaseless flow of new comers for the sake of benefits, and veterans and professionals can always find new loopholes and methods against the rules.

For minimum fare, those who commit fraud transactions provide an optimal amount, depending on the fraud transactions of different periods, in order to ensure the maximum earning within the upper limit of subsidy. In response to the new rule of order dispatch, they suggest that chauffeurs click farm in desolate places. The greater intensity of account freezing urges them to quicken the updating of passenger accounts and to sell mobile phones and software with modifiable IEME codes.

Experts tell the media that Uber is fully equipped with anti-fraud technology. But Uber’s data is not big or smart enough. If too strict control is introduced, the unexpected harms will occur, affecting the user experience. What can be done now is find a balance.

Besides, firms find it very difficult to give more punishments to click farmers. The severest form is but account freezing and earning take-back, far from being a real threat.

When interviewed, Zhao Zhanling, a cyber-lawyer, says that click farm is a default of service contract and platforms like Uber can punish click farmers as per the contract. But this doesn’t easily constitute a breach of law. Still, the breach of law is a civil action that cannot be addressed at administrative and criminal levels. It is not a cost-effective choice. So firms seldom turn to law for resort.

The focus of the cat-and-mouse game between fraud transactions and anti-fraud transactions is on subsidy and earning. The competition between firms and the market growing drive determines the prolonged use of subsidy. This guerrilla war-like game will continue as well.

Also read: 50% China Users Keep Taxi App at the End of Subsidies

China Private Car O2O Market in Q1 2015

Cecilia — Wed, 24 Jun 2015 00:30:20 +0000

In Q1 2015 in China, the top 3 private car service apps were Didi private car (including Yihao private car), Yidao yongche and Uber by total number of active users. EnfoDesk estimates that China private car service will strengthen its service and become the first choice for tier-1 and tier-2 citizens in the near future.

Didi private car (including Yihao private car) ranked the top with 80.9%, followed by Yidao yongche (17.5%) and Uber (8.1%).

In terms of orders, Didi still ranked the top with 78.3% in private car service market in Q1 2015, followed by Uber (10.9%) and Yidao yongche (8.4%).

By the end of March 2015 in China, Yidao yongche covered 74 cities, which ranked the top by numbers, followed by Didi speical car (61), AA car renting (13) and Uber (9).

Even though Didi private car represented 80% orders in Q1, the competition is still fierce in the market in China. Since Baidu invested Uber at the end of 2014, both of them are making efforts to proceed. Yidao yongche is developing itself by cooperating with Haier, Chery and so on.

Also read: Business Car Renting Services’ Potential in China

Momo’s CEO Tangyan on The Fortune 40 under 40 2014

Cecilia — Fri, 14 Nov 2014 01:00:25 +0000

Fortune magazine published 40 Under 40 list last month and Tang Yan (35 yeas old), who is founder and CEO of Momo getting listed on NASDAQ, ranking 24, is the only one from China.

It is said that the list of 40 under 40 is an annual rich list published by Fortune. Many elites from technology industry had been in the list, such as founder and CEO of Tencent, Ma Huateng (Pony), founder and CEO of Jingdong, Liu Qiangdong (Richard), and Wang Jun, dean of BGI( Bejing Genomics Institute).

This year, the top one on the list is CEO of Uber, Travis Kalanick, followed by founder and CEO of Airbnb, Brian Chesky and Mark Zuckerberg, CEO and founder of Facebook.Marissa Mayer, CEO of Yahoo, ranked top on list in 2013. This year, she ranks 6 and she is still the only female one with high rank.

Also read: Fortune 500 2014: Top Chinese Internet Companies

Business Car Renting Services’ Potential in China

CIW Team — Fri, 10 Oct 2014 00:45:14 +0000

In a survey conducted by Tencent, 17% respondents said it’s convenient for their daily transport with taxi service mobile apps while 45% had no idea about what such mobile app is. Since 26% respondents thought it still needs to improve and many Chinese mobile users are not aware of taxi service mobile app, there is much potential for its development in China.

According to Tencent’s latest survey about business-car renting, 16% respondents considered it cheap to have such service while over half of them never used business-car renting. DiDi Taxi and Kuaidi Taxi are popular taxi apps in China, now they are making efforts on business-car renting.

Uber has been introduced into Shanghai in 2013 and now it provides car service in Shanghai, Beijing, Guangzhou and Shenzhen. AAyongche, another car service providers, will expand its car renting service to 20 cities till end of year 2014.

There are 3 sources of profit for these car service providers: commission, value added service, logistics profit.

However, there are still much concern for development of business-car renting service in China:

Since the business-car renting cost consumers a lot, much more than taxi fare, there will be not so many renters at the beginning
There are many restrictions for business-car renting in certain cities in China
Business-car renting service providers should cooperate with reliable insurance companies.
GPS system is indispensable for tracing rented cars.
Be careful with competitors in business-car renting market since competition will be fierce.

Also read: Kuaidi Taxi APP Released Its Q1 Financial Performance