Didi Chuxing, the dominant ride-hailing service in China, yesterday said it will acquire Uber Technologies’ operations in the country, ending a battle that has cost the two companies billions in their competition for customers and drivers.
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Uber has reportedly lost $2 billion in China already and was spending about $1 billion each year trying to capture more of the market.
Kalanick also expressed his optimism that Uber China and Didi Chuxing will be “stronger together”, and hopes the new company will be able to build a profitable business in China, something both companies have yet to achieve. Uber China becomes part of Didi and in exchange Uber gets 20 per cent of the value of the whole of Didi (now around $35 billion, £26.5bn) and Didi will invest in the wider Uber company. The deal gives Didi control over Uber’s brand, business, and data in the country. China has only recently passed a law legalizing ride-sharing businesses, which it previously suppressed. will allow for expansion of the businesses.
Didi Chuxing, which is headquartered in Beijing, claims to have 87 percent of the Chinese market share, providing in the region of 14 million journeys a day in more than 400 cities.
Uber will continue to operate under its own app in China, according to Bloomberg. Didi Chuxing, which served 1.43 billion riders past year, has had a lot to do with that, but China’s homegrown ride-sharing network has been struggling to turn a profit too.
The anti-climax comes after both companies burnt billions of dollars of investor money to expand in the fast-growing market.
Didi said in a statement that Uber had agreed to take a 5.9 percent stake in the new entity.
The move was seen as an attempt to stall the continued rise of Uber by creating Europe’s biggest e-hailing taxi company.
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The purchase of Uber’s China business may complicate Didi’s alliance with other ride-hailing startups around the world. It also has the backing of Chinese tech giants like Alibaba and Tencent. Earlier this year, Apple invested billion in Didi Chuxing.
