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Jean Liu of China's Didi Kuaidi on Uber's 'Short-Term Strategy,' $2 Billion Funding and More! (Q&A)

"If I were [Uber], I would think very carefully. [China] is a highly competitive market. It's already a healthy ecosystem."

Right after China’s powerful ride-sharing service Didi Kuaidi raised an enormous pile of money — $2 billion at a $15 billion valuation — to help in its ongoing expansion in China as the homegrown startup battles the invasion by Uber, I talked by phone with Jean Liu.

She is the president of the company that resulted from the merger of Didi Dache and Kuaidi Dache earlier this year. The combined entity claims it is doing three million private rides in China, compared to Uber’s one million. Both still face regulatory scrutiny in China though, much as Uber does worldwide.

Didi Kuaidi — backed by Chinese giants Alibaba and Tencent (Uber’s ally there is Baidu) — also dominates the ride-hailing business, and has moved into a number of different transportation offerings such as buses and social carpooling.

Liu comes from business royalty in China; she’s the daughter of Liu Chuanzhi, founder of Lenovo, and granddaughter of Liu Gushu, formerly a top banker at Bank of China. The Harvard computer science graduate was a banker with Goldman Sachs before being hired in 2014 at Didi Dache.

Here’s what she had to say:

Re/code: How did the funding go?

Jean Liu: We launched the funding and finished it in just over two weeks. The amount of interest was a big surprise. We were going to raise $1.5 billion. But all our existing shareholders participated and others really understood that transportation in China powered by technology, with our prominent position and deep local knowledge, was really going to be so big.

How do you differentiate between you and your rivals?

We serve every passenger, a lot like the public system that does most of it, but it can be very non-efficient for many. In China, car ownership is restricted, so every day people are commuting long distances. Companies like Alibaba have transformed how people shop, but not how we commute. We actually offer taxi, private cars, and just added social carpooling and buses.

Social carpooling? Is that like LyftLine or UberPool?

No, most private cars do it full-time. Every car owner in this Hitch product has other jobs, and this is only on the way to work and way home. People find it so much fun and like it because they can find someone interesting to talk to. Because of the algorithm, a bidding algorithm, you say you want to share a ride with a Hitch car owner that is closest. And they have the right to reject or pick you. It’s very different than UberPool and LyftLine.

What else are you working on?

Well, there is this chauffeur service. People in China like to drink a lot, but the laws against drunk driving are very strict. So, if you cannot drive home, you call someone who meets you at your car and drives you home.

Are those professional drivers?

Yes and no. The beauty of our business model is the synergies on our whole platform. You can be a private car driver over the weekend and still have Hitch.

And the bus offering?

It’s a practical product we are trying since so many people take a bus to get to the subway and still need a private car service to get to work. We are focusing on popular routes. We also are moving to car-sharing with several riders and valet parking.

You seem to be covering the transportation map, but you raised a lot of money, presumably to beat back aggressive efforts from Uber. What do you think of them?

We welcome all fair competition in the interest of sportsmanship. But we have been through a lot of knife fights to get to our dominant market position. When you have scale, you have operational efficiency, much more frequent orders, so no one is capable of doing what we do now. No one knows the Chinese people better, and our local knowledge is impossible to replicate.

I think Uber has a short-term strategy to subsidize heavily to get drivers and passengers. It’s not fair for me to comment whether they can or can’t do it that way, but we are very, very focused on our job.

But, if I were them, I would think very carefully. It is a highly competitive market. It’s already a healthy ecosystem. We have five million car owners; we do insurance, car sales.

What about you coming to the U.S.?

I think this is our home market, and it is still growing. We can do a lot of robust partnerships in the U.S., with top tech firms and others. Our whole management is committed to maximizing what we have done here first.

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