Techies be careful while fishing Chinese waters
The recent case of the loss of a costly battle by the American ride hailing giant Uber Technologies Inc to the Chinese homegrown rider called Didi Chuxing Technology Co is a stark reminder to global techies that even today the local firms in this country are fully protected from external competition by strict Government regulation and the Great Firewall. It has once again reminded us that China's tech market is a world apart from international competition wherein rules of operation are solely set by the Government in the interest of the domestic operators. While the symptoms of withdrawal of Google, blocking of Facebook and the much-talked about struggle of Amazon in the country clearly shows the isolated nature of the Chinese market and this obviously sends negative vibes to the outside world, particularly to the business conglomerates which are so critical for generating employment to a major chunk of its billion-plus population.
Didi which was valued at $28 billion in its latest fundraising round stated that Uber and its investors in its new UberChina drive will now have a stake of 20 per cent. However, after the merger, Uber will become largest shareholder in Didi. The deal marks an end to Uber's attempt to establish an independent footing in the Chinese market. In fact Uber initiated its grand journey to China in 2013 and it was a rare case of a US tech giant making inroads in that country. Uber's surrender was the result of regulations issued by the Chinese authorities at the end of last month which outlawed subsidies of a huge amount of around one billion dollar that the company was pouring in the market as an incentive for the local drivers and riders. The new deal will witness a new saga of cooperation between the two arch rivals as their fate is being firmly intertwined at a time when China's technology firms are giving stiff competition to global tech majors at least in the domestic market. Instead of shying away with the Chinese competition, the policy-makers in the West must study China so that any future casualty like the one encountered by Uber can be avoided or at least solved amicably. In the absence of Uber, the Didi will have a complete monopoly, with its 90 per cent market share and it can prove to be disasters both for the riders as well as the drivers. It is predicted that eventually, the riders will end up paying more and the drivers may get lesser for sure. The need of the hour is that the Chinese establishment must see that there must be a balance between convenience and dominance while giving extraordinary leeway to Didi. The bottom line for China is that when the local tech trailblasers are aiming high to become global and remain relevant, for them competition is healthy and it will help them opening towards cross-cultural landscape. Hence the Chinese regulators, while assiduously promoting the domestic business, must see that they are not creating an island of technology.