But no competitor seems to have riled the company as much Didi, whose tacticians play by the same scorched-earth strategies Uber has used to win market share around the world.
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After the completion of the long-expected transaction, Uber China will maintain independent branding and business operations to ensure stability and continuity of services for passengers and drivers, says the announcement.
The merger comes after a lengthy battle where the companies raised a combined $20 billion in order to vie for the competitive advantage, reports the Wall Street Journal.
Uber disputes Didi’s math, claiming to control a third of the Chinese ride-hailing market. These changes will go into effect on November 1st and were apparently the last straw for the American company’s struggling operations in China.
The deal also means Uber can stanch the hemorrhaging in China, where it had pumped billions of dollars.
Because China is a unique market – in population, regulatory complexity and concerns about foreign ownership of big companies – some lessons learned there may not transfer to other regions.
Uber has lost more than US$2 billion in the country, people familiar with the matter said. “Our ability to compete and execute globally is very sound”.
Uber and its primary Chinese on-demand auto service rival, Didi Chuxing, have finally buried the hatchet in a landmark deal. In 2005, Yahoo! Inc. made a similar deal, selling its businesses in China to Alibaba Group Holding Ltd., along with a $1 billion investment – one of the internet company’s best bets.
Didi was created in 2015 by merging firms backed by Alibaba and Tencent.
Under the deal, Didi will also invest US$1 billion in Uber, which operates globally outside China, the source said, adding to a series of deals and joint ventures Didi has struck in recent years.
“Uber joined the party a little too late”, Chao said.
He said Uber was operating in more than 60 cities in China and serving more than 40 million rides a week. The need to repel Uber, which was starting to ramp up its service, helped drive the two into each others’ arms.
Other companies have played up their local knowledge. If the deal lets Uber concentrate on winning the rest of the globe, it’s not really a loss to concede China.
“In China we now have a clear victor, but I think a lot of countries will have a dominant player”, he said. Uber has been spending at least US$1bil a year to gain ground in China, while Didi has been offering its own subsidies to drivers and riders to build its business.
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Tan, the Grab chief executive, warned in his memo that Uber could make a harder push in Southeast Asia.
