Uber has the lost the fight to retain its Chinese arm after it was purchased by arch ride-sharing rival Didi Chuxing.
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The deal with Uber “does change the dynamics” between Didi and its existing ride-sharing partners such as Grab and Ola, said a Didi investor.
Grab declined to comment, while SoftBank and Didi did not respond to requests for comment.
Industry insiders believe the response shows that the ministry is likely to take a tough stance on the deal, according to the report.
And all things considered, they didn’t do at all badly: They rolled out aggressively into many Chinese cities, and for a while even enjoyed a market share lead in some of those cities, like Chengdu and Xiamen. Grab CEO Anthony Tan said in a statement on Monday that the impending deal is a victory for Didi and underscores how the ride-hailing business favors domestic players.
Didi is in an alliance with Grab, Ola and Lyft Inc that unites four rivals to Uber.
The company said in June it raised $7.3 billion from investors in what it described as one of the world’s largest private equity funding rounds. Uber Technologies and Uber China’s other shareholders, including search giant Baidu Inc., will receive a 20 percent economic stake in the combined company. Didi says Uber China made less than $60 million in net profit a year ago. “This could be an indication that they will reduce or eliminate their high-burn strategies in India”, he added.
In 2015, Didi and Kuaidi merged into a single company which created China’s biggest ride-hailing service.
Those connections enabled Didi customers to hail a ride and pay for it through payment systems Alipay, Alibaba’s system, and social media platform WeChat, which is owned by Tencent. The US company plans to redeploy 150 engineers from its Chinese operations to other key markets…But we have seen that when the local champion stays true to their beliefs and strengths, they can prevail, …We see this happening in China, and it will be the same here.
“Uber joined the party a little too late”, Chao said.
Also, China Investment Corporation, the sovereign wealth fund responsible for managing part of the People’s Republic of China’s foreign exchange reserves, has invested in Didi Chuxing as well as Alibaba Group Holding Ltd, the Chinese e-commerce titan. Didi has expanded to buses, chauffeurs and other services. Lack of knowledge of implementing the business locally is one of them. Uber China’s ODM service will continue to operate independently.
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Didi and Uber discussed a potential combination at least five times and started actively pursuing a deal about three months ago, investors familiar with that process and advisers to the companies said. “There has never been a company with as much success in capital raising as Uber”. It’s hard not to see China’s recently passed regulations for the on-demand ride market as a factor.
