Uber hitches a ride into nation with Baidu's cash

Yin Jingxue, an analyst with the Beijing-based Analysys International, said it is clear that Uber can benefit from the traffic generated by the users of Baidu Map and Baidu, which lags behind its rivals in mobile payment, can use Uber to help users form the spending habit with Baidu Map.

"It is important for Baidu to establish its mobile map app as a place where people can shop and pay money. Car hailing is only one sector. As people get used to making payments with Baidu Map, it (Baidu) can anticipate more business," she said.

"For example, people can buy coupons on Baidu Map and dine at their local restaurants," Yin said, adding that the commercialization of mobile maps is still at an early stage in China. The success of the Uber cooperation is key for Baidu to turn its mobile map into a huge magnet for business in the mobile arena.

However, Uber, which has recently been hit by public relations debacles regarding its recruitment methods, driver screening and arguably sexist promotions, may find it difficult to reshape the local market even with Baidu's help, said Wang Xiaofeng, an analyst with multinational tech research firm Forrester Inc.

Cash-flush Tencent and Alibaba have invested a lot to help Didi and Kuaidi gain users. Since the beginning of this year, the two apps have offered a lot of rebates to attract people to book rides through their smartphones.

"Alibaba's Alipay and Tencent's WeChat, both of which have a huge user base and have established themselves in China as mobile payment systems, have the edge to expand into the car-hailing business," said Wang, adding Baidu does not have a star service or product in the mobile arena.

The competition between Uber and the local players is expected to be tough as Didi and Kuaidi, which started their taxi-hailing business recently, have climbed up the ladder to offer higher-end chauffeur service, just like Uber does.

For example, Didi, which drew a $700 million investment from Tencent and other investors earlier this month, has been actively offering coupons to encourage people to use its higher-end chauffeur service.

Kalanick also had to contend with queries on the higher costs for Uber services in China. But he said that Uber wants to make sure that it can connect riders with the highest quality and at the lowest cost. "Our offerings range from the Uber Black to People Uber, and we have different price points for customers to choose from," he said.

Yin from Analysys International said that as long as Uber can provide the best experience in China, people will be happy to pay more. "But the most important thing for further development in China is marketing. Most of the Uber users in China are still expatriates in the country," she said.

Phoenix Zhang, a white-collar worker from Beijing who uses Didi Dache daily to book cars to commute from home to work, said she has never heard of Uber.

"With the coupons, a ride home via a luxury car such as a BMW can be cheaper than taking a taxi. Even without the coupon, I still want to use the app to book a taxi. It is too cold in Beijing, I can't stand waiting in the wind and waiting for a taxi to show up," she said.