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Didi 10 Uber 0: Why?

By Shlomo Maital

Didi

Uber, the global ride-share company, has sold its China business to Didi, its Chinese counterpart. This, after Apple announced a major investment in Didi.

   Uber’s failure in China (it never had more than a 10% market share, compared with Didi’s 80 %) reminds me of eBay and its massive defeat by Alibaba, despite a huge $150 m. investment of eBay in its China operation.    Alibaba, by the way, along with Tencent, is a major owner of Didi.  

   We can learn a lot from the Uber-Didi battle. The head of Uber China, and of Didi, are cousins. Their uncle was a founder of Lenovo. Didi has been adding 400,000 drivers a day! It has been innovative, offering innovations like bus service and car pooling. Business in China is based on relationships, and the two cousins’ close relationship smoothed the deal.

     I am writing this blog in Pittsburgh, where I’m visiting my sister. Decades ago, I visited her and went to see the steel mills, in Braddock and along the rivers. They’re all gone. And the jobs have migrated (though not the same steelworker people) to health care. U. of Pittsburgh Medical Center, Montefiore Hospital and others now are the major employers, in Pittsburgh, and the city has undergone an amazing revival. This is not, however, true of other rust-belt cities like Gary Indiana and Cleveland, Ohio.

     China has a new program, or policy, Innovation Plus. The idea: Migrate steel jobs toward services, like Didi. America never did have any such plan. The free market is supposed to do the job. But it did it very very poorly or not at all. China’s government is actively encouraging Internet service businesses, like Alibaba’s Taobao villages which do e-commerce.

     I have written a case study of Alibaba, including how it triumphed over eBay, available to anyone who sends me an email: smaital@tx.technion.ac.il

 

Chaos Is the New World Order

By Shlomo Maital

     Chaos

  Thomas Friedman’s latest New York Times column helps us understand what is going on in the world.  In a word:  Chaos.  Chaos is the new world order.  Here is what he means.

   Quoting a high-tech executive, Tom Goodwin,  Friedman notes:  Uber is the world’s biggest taxi company but has no taxis. Facebook is the world’s most popular media owner but has no content. Alibaba is the world’s most valuable retailer but has no inventory.  Airbnb is the world’s biggest accommodation provider but has no real estate.

    So what is going on?  More and more businesses are simply doing global matchmaking (someone needs something, someone else has it), without owning assets.  More and more businesses are digitally creating markets where none existed before.  (You have a seat in your car?  Why not use it to make some spare cash?)

    This trend is highly disruptive, because it disorganizes and reinvents whole industries, in no time.  The existing players (taxi drivers, hotels) have little time to adapt. 

     It’s pretty clear, out of this chaos will emerge some order, and the chaos is actually creating value.  But the implications are huge.   A whole range of job skills will disappear.  New patterns of markets and ownership will emerge. 

     For now, chaos is the new world order.   How are YOU adjusting and adapting?  Do you have a job skill that will be needed in a year or two, or do you need to reinvent yourself and your skills?  If so, how will  you do it? 

    These are interesting times indeed.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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