Zombie orders pump up growth of Uber in China

July 15, 2015 17:39
Some advanced swindlers are reportedly selling teaching materials on Taobao.com on how to fake orders on the Uber platform. Photo: Internet

The firm behind the controversial US-based car-hiring app Uber reportedly intends to list itself in mainland China or Hong Kong as early as next year, as part of its ambitions to expand its business into the Chinese market.

However, Uber Technologies Inc. needs to make more effort to understand the market before rushing in, or else it may suffer the same problems many US internet firms, such as Yahoo Inc. and Google Inc., experienced.

Uber has had its eyes on the mainland market for a while.

The firm invited mainland tech behemoth Baidu Inc. to be one of its investors at the end of last year.

Sina Finance reported that international investment bank Goldman Sachs Group Inc. is now helping Uber to raise US$1 billion in China.

Uber executives reportedly told their investors the firm is getting about one million orders per day in China, nearly equal to the total it received worldwide six months earlier.

Nevertheless, the smart money remains cautious.

Many top Asian and mainland investors have reportedly declined to invest in the firm, including one of China’s biggest property developers.

One of the concerns is that a large group of zombie drivers and zombie passengers have emerged, taking advantage of Uber’s order and bonus system to earn fat profits.

By faking orders, the professional zombie order operators can reportedly earn up to 100,000 yuan (US$16,100) a month.

This is how it works: zombie drivers first buy a mobile-phone SIM card and then register a Uber account using the phone number the card provides.

Once the registration is done, partners of the zombie drivers will pretend to be passengers and send out car-hire orders through the Uber app, Sohu Technology revealed.

To quickly build up market share in China, Uber offers generous bonuses to attract both professional and amateur drivers.

Uber’s drivers can receive up to three times the fare as a bonus when they take an order.

If they can reach 30 orders per week, Uber will give them 300 yuan more as an additional bonus.

Drivers for rival firms such as Didi Dache are subsidized for only up to four orders per day.

The huge amount of subsidies given out by Uber explains why people prefer to create fake orders through its platform.

Some advanced swindlers have even created plug-in components specially designed to create zombie orders.

The plug-in software can let the operators manipulate which driver account an order goes to.

Some programs can even be used to forge driving records.

The zombie drivers can earn 30,000-50,000 yuan a month without actually having to drive.

Uber has raised nearly US$6 billion in total so far, and its valuation jumped to US$50 billion in May.

The firm is now worth more than 80 percent of the constituents in the Standard & Poor's 500 Index, Forbes reported.

This explains why Uber is splashing money like a tuhao (nouveau riche) in mainland China.

However, the firm still has a long way to go in China.

In the latest research data released by Analysys International, the three largest players in China’s car-hiring market by order volume in the first quarter of this year were Didi Dache, Uber and Yongche.com, with market shares of 78.3 percent, 10.8 percent and 8.4 percent respectively.

Yongche.com operates in 74 cities, and Didi Dache provides services in 61 cities, while Uber is available only in seven.

– Contact us at [email protected]


EJ Insight writer