Uber works with car rental companies to continue operation in China

A passenger orders a taxi at a street in Shanghai with a smartphone Didi application. Didi and Kuaidi are estimated to hold almost 99 percent of the domestic taxi-hailing market.[Photo/Xinhua]

Uber Technologies Inc said its strategy of working with vehicle-rental companies in China instead of individual car owners has allowed it to continue operations after a government ban on unlicensed private-car hire.

Uber's driver services are available in nine Chinese cities including Beijing and Shanghai and have not been affected by a ban last month on private cars offering unlicensed taxi services via mobile-phone applications, according to Candice Lo, who heads the company's expansion efforts in China.

"We change our business and tweak it for the local markets," Lo said in a phone interview. "A lot about how we brand Uber as a business, we do it differently in China."

The San Francisco-based company is looking to China for new revenue as legal challenges and regulatory hurdles slow its expansion in countries from South Korea to Colombia. In China, Uber is a latecomer to a market dominated by Alibaba Group Holding Ltd's Kuaidi Dache and Tencent Holdings Ltd's Didi Dache.

Uber introduced a service in Shanghai that provides English-speaking drivers to draw tourists and expatriates who cannot use local taxi-hailing apps because they do not know Chinese, Lo said in an interview on Tuesday.

The company teamed up with hotels and restaurants in Guangzhou, capital of Guangdong province and famed as China's food capital, to provide transportation services for food-loving riders, according to Lo. In Chengdu, the company works with Bayerische Motoren Werke AG's Mini to use the cars, she said.

These measures might not be enough to help Uber beat local players, said Wang Chao, a Hong Kong-based analyst at Nomura Holdings Inc who researches technology firms.

"Didi and Kuaidi's first-mover advantage is very obvious," Wang said. "It's not going to be easy for Uber to compete in the mass market."

Didi and Kuaidi are estimated to hold almost 99 percent of the market, with 154 million registered users in more than 300 cities, according to the official Xinhua News Agency.

Uber has seen "double-digit" growth in trip numbers and number of users and will expand its business to more cities in China, Lo said, declining to be more specific.

"China is a major priority for the company," Lo said. "China is definitely one of the fastest-growing markets."