China’s Uber Targets U.S. With Mandarin-Speaking Drivers

Source: Yongche.com via Bloomberg

Herman Zhou, founder and chief executive officer of Yongche.com. Close

Herman Zhou, founder and chief executive officer of Yongche.com.

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Source: Yongche.com via Bloomberg

Herman Zhou, founder and chief executive officer of Yongche.com.

Yongche.com, China's largest mobile car-sharing service, is preparing to challenge Uber Technologies Inc. on its home turf of San Francisco and New York.

The Beijing-based company plans to add the two U.S. cities to the 57 in China and Hong Kong where its ride-sharing app is already available. To differentiate its service, Yongche will provide Mandarin-speaking drivers so that Chinese travelers arriving at places such as John F. Kennedy Airport can get to their destinations without phrase books and awkward gesticulations.

“Most Chinese don’t speak English and find it difficult to communicate with foreign drivers after they land in another country,” Herman Zhou, 41, founder and chief executive officer of China’s largest mobile car-sharing service, said in an interview in Beijing this week. “We will have Chinese-speaking drivers in the U.S. and other places to make it seamless and stress-free.”

Yongche, whose Chinese name means “easy arrival” in Mandarin, is among the growing number of car services worldwide seeking to emulate the success of San Francisco-based Uber, which is valued at $17 billion based on its latest financing. While taxi drivers across Europe escalate their opposition to such services, Yongche’s CEO is so confident about the future -- Chinese outbound travelers reached almost 100 million last year -- that he forecast his company will be valued as much as Uber in a couple of years.

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“Yongche is no doubt a top player in China and its product is well-tailored to Chinese consumers,” said Danny Yang, a Beijing-based analyst with Internet researcher IResearch Consulting Group. “They may face hurdles overseas including adjusting to different regulations and opposition from traditional taxi operators.”

Long Queues

Uber Chief Executive Officer Travis Kalanick, who started Uber in 2009 after he and partner Garrett Camp couldn’t find a cab in Paris, has pushed the company into 128 cities in 37 countries. Zhou founded Yongche 14 months later and said he never heard of Uber until he went to Silicon Valley. The idea for Yongche came from his frustrating wait in long queues for taxis at Shanghai’s airport, he said.

Yongche has 2 million active users and 50,000 contracted cars in 57 cities in China, including Hong Kong, and plans to expand to 150 cities by next year and increase its subscriber base by tenfold, according to Zhou.

After New York and San Francisco, Zhou plans to expand to Los Angeles, Boston, London, Frankfurt, Singapore, Taipei and Tokyo, cities that are frequented by Chinese travelers.

“We want to prove to the world that the competition between Uber and Yongche.com isn’t that of between a global and local company, but a match-up of two different business models,” Zhou said. “They can come to China, we can also expand and compete with them in the U.S.”

Chinese Tourists

Yongche is betting that the same customers who use its service in Beijing or Shanghai will also use it when they’re vacationing or on business trips. Chinese nationals made a total of 98 million trips abroad last year, up 18 percent from 2012, according to the China National Tourism Administration. That’s a trend Zhou predicts will continue as increasing affluence boosts travel and more companies expand overseas.

To be sure, Yongche isn’t immune to the opposition Uber now faces in cities across the U.S. and Europe.

Traffic snarled in cities from London to Madrid and Berlin to Paris this week as more than 30,000 taxi and limousine drivers blocked tourist centers and shopping districts to protest against what they saw as a failure by governments to hold Uber to the same licensing standards.

Airport Service

Yongche counts Beijing-based online travel booking service Ctrip.com International Ltd. (CTRP), China Broadband Capital Partners LP and Qualcomm Ventures Group among its investors. Zhou declined to provide details about the size of the shareholdings they hold in the company or the estimated value of the company.

The company will promote its airport pickup services to customers who book international air tickets through Ctrip.com, he said.

Zhou said that Yongche gives customers more customization and choice than Uber.

For example, users can reward drivers who provide good service by saving their profiles and offering them priority for future jobs, Zhou said. If multiple drivers respond to a booking, Yongche allows the customer to pick the driver instead of automatically assigning the nearest available car.

Customer Choice

Yongche’s users can also choose from different models, including Chery Automobile Co.’s subcompact QQ and Bayerische Motoren Werke AG’s 7-series luxury sedan, Zhou said. For those who don’t have smartphones, the app allows for friends or relatives to pay for the booking through their own accounts.

“We let the customers make the final decision instead of letting the machine rule,” he said. “Our business model comes with bigger potential than Uber as we provide more customized services.”

Zhou first ventured into business with his older brother in 1994 after graduating from college. Called TICO Digital Group, Zhou built the company into one of China’s top makers of professional audio equipment, outfitting venues like Beijing’s Great Hall of the People and the “Bird’s Nest” National Stadium for the 2008 Beijing Summer Olympics.

With Yongche, Zhou says his aim is to make a service once reserved for the elite and privileged available to anyone with a smartphone.

“The beauty of the Internet is that it allows everybody to enjoy a better life,” said Zhou, who professes to dislike driving. “I know it’s an Utopian vision to share as much resources as possible, but it’s totally worth a shot. I believe the sharing economy is the next big thing.”

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho

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