How subsidy wars killed brand loyalty - William Bao Bean

William Bao Bean

When the ride-hailing wars between Uber and Didi has confirmed one feeling among Chinese consumers, it is that loyalty to brands does not pay off, says Shanghai-based VC William Bao Bean to Bloomberg. Brand loyalty was already low, but the latest Uber-Didi wars have made things worse.
Bloomberg:

Startups backed by Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. once offered plentiful and steep discounts on everything from on-demand massages to personal trainers in a massive land grab. But as consolidation revs up -- seen most recently in Didi Chuxing’s acquisition of Uber Technologies Inc.’s Chinese operations -- this peculiar golden era for smartphone-wielding consumers is waning. Didi’s deal wasn’t the first merger intended to end internecine subsidy wars, and it won’t be the last -- and that means fewer doorbusters for Li and millions of her cohorts. 

The subsidy “wars have just been brutal. Well, great for the consumer, but brutal in terms of burning cash,” says William Bao Bean, an investment partner at SOSV. “And they’ve trained Chinese consumers to not be loyal, but instead to go anywhere to seek out bargains. Consumer loyalty means nothing in China.”

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