Burning cash has become alarmingly fashionable among Chinese internet companies, many of whom have taken to paying customers massive subsidies to use their services in hopes that their competitors go out of business before they run out of money.
One start-up, Emao.com, which aims to be an online platform for car dealerships, has based its entire marketing strategy around losing money. “We burn cash from our investors to win the hearts of car shoppers,” a recent ad says.
Travis Kalanick, chief executive of Uber, boasted earlier this year that the ride-sharing app’s China affiliate was losing more than $1bn a year, in part because of the subsidies it was paying to grab market share. A local car hailing app, Didi Kuaidi, is waging a fierce price war against Uber in several cities.