China: Uber’s drivers quickly learned to take advantage of the firm’s expansion strategy image

The world’s best known car-sharing company, San Francisco-based Uber Technologies, has taken the world by storm, but faces stiff local competition in China, where it’s increasing its efforts to secure a large piece of the billion-dollars worth market.

But the US car-booking company faces a previously unknown threat – Uber has pledged millions of dollars in free rides and driver bonuses, hoping the cash would increase training of its Chinese drivers and bring the Uber services closer to consumers. But some of its drivers went the opposite way – they learned quickly how to profit from the endeavor. There’s a developing shady industry that helps drivers use modified smartphones and software to place fake bookings in order to trick the service provider into paying for phantom travels. Naturally, there are no statistics – at least reliable ones – to show how extensive the scheme has grown, but from interviews with unnamed Uber drivers, equipment vendors and reviews of postings on dedicated online forums, it is clear the scheme has taken a toll on the $1 billion that Uber has said it would spend on the expansion of Chinese services this year.

And there’s another issue for Uber. The fake bookings are being counted by the company among the figures for trips, with the car-booking service provider saying it has reached about one million trips in China this month. “That number is definitely exaggerated,” comments Zhang Xu, an analyst at researcher Analysys International. Uber is giving chase of market leader Didi Kuaidi, a service backed by local powerhouses Alibaba Group Holding Ltd. and Tencent Holdings Ltd., who covers around 78 percent of ride calls.

Via Bloomberg