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Uber gets a jump start in China with Baidu Wallet

06/03/2015| 7:15:30 AM|

Uber's partnership with mobile payment platform Baidu Wallet could be the game changer it has been waiting for.

Earlier this month Uber made a small but potentially significant step to finally break into the Chinese market. The US based ride hailing app has struggled to make any real impact to date but a partnership with mobile payment platform Baidu Wallet could be the game changer it has been waiting for.

Baidu Wallet will be Uber's main online payment channel in China however its service is currently limited to nine major cities, including Beijing, Shanghai and Hangzhou.

It will be interesting to see what sort of traction Uber can get with the Baidu alliance because it faces some serious competition. China's two dominant mobile-app taxi services, Didi Dache and Kuaidi Dache, are in the process of merging into what could become a seemingly impenetrable barrier, controlling about 85% of the market. Yet by aligning with Baidu, Uber may find dealings with regulatory authorities that much easier.  

Baidu Wallet itself will be hoping the Uber tie-up will allow it to claw back some market share from the equally dominant Alipay in the mobile payments space.

The Baidu Wallet service is embedded in Baidu Maps, which the company claims has a 70% penetration rate among mobile users. Primarily known outside China merely as a search engine, Baidu's constituent parts are as diverse and wide ranging as Google's. The company has its fingers in many pies, with more than 50 separate business units including e-commerce, Internet TV, anti-virus software, a social networking platform, and its own Google Chrome-like web browser.

Where Uber fits in to this beyond a mobile payment tie-up is anyone's guess. 'Baidu Around You' - a location based sharing platform for travel, hotels and shopping, and its online travel company Qunar are obvious choices for some kind of early collaboration.

The groundwork for this Baidu-Uber coupling was actually done back in December 2014. Baidu at the time said it would develop a 'strategic partnership' backed up with a sizeable investment in Uber, thought to be in the region of $600 million.

One major criticism levelled at Uber has been its desire to impose a tried and trusted business model in culturally different overseas markets where it clearly doesn't work.

Like China, Uber has suffered a few missteps along the way in India and is now finally beginning to get the message.

The company is going decidedly low-tech and trialing cash payments for rides in Hyderabad and may roll it out across all cities it covers in India.

"Indians are more comfortable paying in cash. We are in the process of understanding the potential and we are currently testing it out in Hyderabad. As we look to expand operations in India, we have understood that cash payments will be a crucial factor in driving that growth," an Uber spokesman said.

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TAGS: Uber | Baidu Wallet | partnership
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