The company was burning through more than $1 billion a year there in a price war with Didi.
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Uber China will continue to exist in the country in an effort to maintain stability, at least for now. Uber Chief Executive Travis Kalanick will join Didi’s board of directors and Didi Chuxing CEO Cheng Wei will join Uber’s board. Uber Technologies and Uber China’s other shareholders, including search giant Baidu Inc., will receive a 20 percent economic stake in the combined company.
The San Francisco company has already lost $2 billion in the Chinese nation in two years there. “I have no doubt that Uber China and Didi Chuxing will be stronger together”. In return, Didi will make will a $1-billion investment in Uber proper.
Baidu: Chinese search giant Baidu invested in Uber’s China operations in late 2014, and it now owns a minority stake in the Chinese business.
Uber disputes Didi’s math, claiming to control a third of the Chinese ride-hailing market.
“Three years ago, I traveled to China with a small group of people to see if we might be able to launch Uber there”, said Travis Kalanick, Uber’s CEO, in a blog post, adding, “Most of the people we asked for advice thought we were naïve, insane – or both”. Didi has also formed an alliance with Lyft, India’s ride service Ola and Southeast Asia’s ride-hailing startup Grab in an effort to compete with Uber. Uber is profitable in the U.S., Canada and about 100 other cities.
Didi Chuxing has reached an agreement to acquire Uber in China following a $1 billion investment by Apple, reports Bloomberg.
This is the latest sign that global Internet and technology companies are having a hard time breaking into China’s tough market where entrepreneurs have built formidable businesses, with government support.
While Uber will walk away from operations in China, it is taking a significant stake in the largest player there.
Both companies have spent billions of dollars on subsidies for drivers and passengers, as well as trading vitriolic accusations, as they fought for dominance in the potentially lucrative market.
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By “shedding its massive losses” in the country Uber will help clear its way to a future flotation, Bloomberg said.
