Is China being taken for a ride?

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Didi Chuxing's takeover of Uber China last week is another vindication of the notion that global dominance of ecommerce by a few brands is a lazy and superficial theory.

Internet giants are finding around the world that the next stage of market penetration (ie the interesting bit beyond acquisition of subscribers to where you actually make money from them) is difficult without significant localisation of distribution, content, offerings and business models. All the big players see this: Facebook is trying to figure out how to market better in Asia, LinkedIn is growing its sales teams on ground in key emerging markets around the world, Amazon realises that it has a real fight on its hands to win against the likes of India's Flipkart, and Netflix has fallen foul of local tax regulation in various markets, in some of which its service has been stopped.

Didi taking over Uber may feel like a prophetic truth-coming that reassures us that the world is not about to be dominated by a small number of Western brands. Just as Francis Fukuyama was wrong in the 1990s to say that we are experiencing "the end of history" because democracy will become the dominant political system, whoever said the first to scale in internet wins is wrong too.

But in my mind there is a grave concern raised by the Didi takeover too, and this is about customer choice. With the China rides market to be dominated by one player, what happens to Chinese consumer choice? Will customers be able to benefit as they would from several players vying for their service, doing their best to keep their taxis new and clean, their drivers the most courteous and their fares the most competitive? All of that requires agility and costs money: Why bother if there isn't anyone threatening your trade?

Services such as taxi rides must have reasonable competition (or highly regulated service standards and fixed fares) to offer quality of service and value: Taxi service is not a monopolistic industry by nature. In Indonesia, Silver Bird and White Horse both provide great service partly because there is fierce competition for customers.

I haven't seen what the Chinese competition authorities are thinking, and Didi clearly has grand visions for bringing more to its customers, but we must hope that the week's events do not result in China's millions being "taken for a ride”.

The thoughts and opinions shared here are of the author.