Take Uber. Before entering China, Uber senior leaders did their homework carefully to avoid the mistakes that had derailed many other (digital and not) multinational firms. Uber set up a highly autonomous Chinese subsidiary; partnered with China’s largest search engine, Baidu; committed significant capital and paid out $2 billion in subsidies to win market share; and offered services specially tailored to the Chinese market. Uber’s founder and CEO at the time, Travis Kalanick, took a hands-on role and spent over 20% of his time in China.
Despite all this, Uber wound up retreating from the Chinese market. What went wrong? It is hard to pinpoint any individual failure on Uber’s part. One notable challenge, however, is that for the first time, Uber met a genuine competitor: Didi Chuxing, which was more determined, had a larger cash reserve, and focused exclusively on China at that time. Uber sold its operation to Didi Chuxing. This case suggests that simply addressing each of the known mistakes made by other multinationals in the past is often not enough to guarantee success in the future. A more holistic approach is needed.