LIVE FROM RISE 2016, HONG KONG: Uber’s market share in China has jumped from just 1 per cent to nearly 30 per cent over the past year or so, while its financial outlay per trip has dropped 75-80 per cent, said Allen Penn (pictured), head of its Asia operations.

“We feel great about our trajectory in China. This is the type of progress we were looking for to allow us to want to continue to invest in China, because we see it moving towards a sustainable path,” he said.

If you look at Uber’s model across the world, he explains that prices of Uber trips fall as the business scales. “As you have more drivers on the system, you have a driver closer to you, so they spend less time idle and more time making money, which means fares can come down.”

Just hours before Penn spoke at the event, Uber announced it received $3.5 billion from the Public Investment Fund of Saudi Arabia, the biggest investment it has received to date.

Declining subsidies
When you’re a new entrant in a market, he said, you have to invest in the early stages, and that’s been the case for Uber in markets across the world. “What is different in China is the scale of the opportunity, thus the scale of the investment required to address that.”

He admitted that competitive factors in China have pushed the spend levels to “sometimes irrational levels”, but noted that going in it was aware of the required investment to push to a more mature phase with sustainable fare prices.

For a business like Uber, which is founded on the idea of making it easier for riders to get around cities, he said, the peer-to-peer model captalises on the scale of the country’s urbanisation, which is greater than anywhere else in the world. China was Uber’s first market in Asia.

Its key principle when it moved into China in 2013 was building it as a locally-run business, with local teams managed by the “best Chinese leaders we could find”, he said. A group of Chinese investors in January invested nearly $2 billion into Uber.

Penn said 73 per cent of Uber drivers work fewer than 10 hours a week, which shows that people are able to fit additional work into their schedules to earn extra income.

In early May Uber expanded its partnership with e-commerce giant Alibaba’s online payment platform to allow Chinese passengers to pay for rides outside of China in yuan using their Alipay accounts.

Chinese rival Didi Chuxing, the country’s most popular ride-hailing app, received a $1 billion investment from Apple last month, the single largest investment the firm has ever received. Formerly known as Didi Kuaidi, it claims it completes more than 11 million rides a day, serving close to 300 million users in more than 400 Chinese cities.