Uber is spending more than $1bn per year in order to compete in China, where it faces major competition from local rivals.
The Chinese arm of Uber Technologies Inc is now valued at over $8bn, after raising over $1bn in the most recent funding round, but has not yet become profitable on the Chinese mainland, Reuters reports.
“We’re profitable in the USA, but we’re losing over $1 billion a year in China,” UBER CEO Travis Kalanick told Betakit.
Uber’s competition comes in the form of Chinese company Did Kuaidi, backed by Chinese tech giants Tencent Holdings Ltd and Alibaba Group Holding Ltd.
Both companies are expecting China’s online transport market to become the world’s biggest and have spent heavily to subsidise rides and gain market share.
Uber told Reuters they believed Did Kuaidi was spending “many multiples” more than they are.
“We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share,” Kalanick said.
“I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share,” he added.
