UNISA
MNB3701 Portfolio
Assignment S1
2025
Example of Portfolio Assignment (distinction level)
,Question 1: Formal and Informal Institutions in China that affect Uber’s
operations
1.1 Formal Institutions
Political systems
The structure of the Chinese government allows it to have tight control over its
regulatory environment and enables it to enforce new laws and national regulations
quickly, which creates barriers for foreign companies like Uber. For instance, national
legislation introduced in 2016 demanded background checks on drivers, vehicle
registration, and fare regulation by local authorities. Additionally, policies that favored
domestic innovation gave firms like DiDi an advantage over international companies.
Economic systems
China’s mixed economy combines elements of both command and market systems.
According to Peng & Meyer (2019:43), China continues to maintain a key role both as
owner and investor of enterprises, as well as regulator of industries. This dual structure
impacted Uber’s ability to compete effectively. For example, DiDi secured financial
backing from local giants such as Tencent and Alibaba, which enabled it to offer lower
prices and scale quickly. Uber, on the other hand, was constrained by price
regulations, limiting its ability to compete aggressively on fare structures.
Legal systems
China operates under a civil law system, which is characterized by codified statutes
and a legal structure derived from continental European models (The State Council of
the People’s Republic of China, 2020). This system emphasizes written laws enacted
by legislative bodies, rather than relying on precedent. Uber encountered regulatory
inconsistencies across regions, making it difficult to operate uniformly. For example,
Uber’s offices in Guangzhou were raided despite the company not being officially
illegal. Varying interpretations of the ride-hailing laws by local governments added to
this uncertainty.
1
, 1.2 Informal Institutions
Culture
Culturally, Chinese society places a strong emphasis on authority and social harmony
over individualism, reflecting characteristics of a collectivist society shaped by
Confucian traditions (Peng & Meyer, 2019:60). Additionally, China ranks highest in
long-term orientation, which aligns with values such as perseverance and respect for
tradition. These are traits that influenced how local consumers and institutions
responded to Uber’s more aggressive western business model (Peng & Meyer,
2019:64). DiDi built trust by working with established taxi networks and integrating
familiar platforms like WeChat and Alipay. In contrast, Uber’s reliance on private
drivers and its initial use of credit card payments were less well received.
Religion
Many of China's cultural expectations are shaped by traditional philosophies, such as
Confucianism, which emphasise social harmony, hierarchy, and ethical conduct
(National Geographic Education, 2023). These values significantly influence how
individuals interact in society and business settings. Uber’s aggressive expansion
strategy clashed with these expectations and was seen as disruptive, whereas DiDi’s
collaborative approach with taxi operators aligned more closely with these traditional
values.
Language
Language, as an informal institution, plays a crucial role in shaping communication
and understanding in international business environments. Chinese is the world’s
largest language in terms of native speakers (Peng & Meyer, 2019:68), making
localization a critical factor for market success. Uber initially launched its mobile
application in English, which limited its accessibility and created communication
challenges. Over time, the application was localized into Mandarin (You-bu), and Uber
replaced Google Maps with Baidu Maps to improve local usability. However, these
changes were made after DiDi had already captured significant market share.
2
MNB3701 Portfolio
Assignment S1
2025
Example of Portfolio Assignment (distinction level)
,Question 1: Formal and Informal Institutions in China that affect Uber’s
operations
1.1 Formal Institutions
Political systems
The structure of the Chinese government allows it to have tight control over its
regulatory environment and enables it to enforce new laws and national regulations
quickly, which creates barriers for foreign companies like Uber. For instance, national
legislation introduced in 2016 demanded background checks on drivers, vehicle
registration, and fare regulation by local authorities. Additionally, policies that favored
domestic innovation gave firms like DiDi an advantage over international companies.
Economic systems
China’s mixed economy combines elements of both command and market systems.
According to Peng & Meyer (2019:43), China continues to maintain a key role both as
owner and investor of enterprises, as well as regulator of industries. This dual structure
impacted Uber’s ability to compete effectively. For example, DiDi secured financial
backing from local giants such as Tencent and Alibaba, which enabled it to offer lower
prices and scale quickly. Uber, on the other hand, was constrained by price
regulations, limiting its ability to compete aggressively on fare structures.
Legal systems
China operates under a civil law system, which is characterized by codified statutes
and a legal structure derived from continental European models (The State Council of
the People’s Republic of China, 2020). This system emphasizes written laws enacted
by legislative bodies, rather than relying on precedent. Uber encountered regulatory
inconsistencies across regions, making it difficult to operate uniformly. For example,
Uber’s offices in Guangzhou were raided despite the company not being officially
illegal. Varying interpretations of the ride-hailing laws by local governments added to
this uncertainty.
1
, 1.2 Informal Institutions
Culture
Culturally, Chinese society places a strong emphasis on authority and social harmony
over individualism, reflecting characteristics of a collectivist society shaped by
Confucian traditions (Peng & Meyer, 2019:60). Additionally, China ranks highest in
long-term orientation, which aligns with values such as perseverance and respect for
tradition. These are traits that influenced how local consumers and institutions
responded to Uber’s more aggressive western business model (Peng & Meyer,
2019:64). DiDi built trust by working with established taxi networks and integrating
familiar platforms like WeChat and Alipay. In contrast, Uber’s reliance on private
drivers and its initial use of credit card payments were less well received.
Religion
Many of China's cultural expectations are shaped by traditional philosophies, such as
Confucianism, which emphasise social harmony, hierarchy, and ethical conduct
(National Geographic Education, 2023). These values significantly influence how
individuals interact in society and business settings. Uber’s aggressive expansion
strategy clashed with these expectations and was seen as disruptive, whereas DiDi’s
collaborative approach with taxi operators aligned more closely with these traditional
values.
Language
Language, as an informal institution, plays a crucial role in shaping communication
and understanding in international business environments. Chinese is the world’s
largest language in terms of native speakers (Peng & Meyer, 2019:68), making
localization a critical factor for market success. Uber initially launched its mobile
application in English, which limited its accessibility and created communication
challenges. Over time, the application was localized into Mandarin (You-bu), and Uber
replaced Google Maps with Baidu Maps to improve local usability. However, these
changes were made after DiDi had already captured significant market share.
2
