Ride-hailing app Uber has decided to merge its China business with market leader Didi Chuxing. Uber global will receive 5.89 percent in the combined company that would be valued at $35 billion. Chairman of Didi Cheng Wei, will join the board of Uber while Travis Kalanick, Uber Chief Executive, will join the board of Didi.
- The end of the battle between two giants:
Just a year ago Uber founder Travis Kalanick had called China as Uber’s “number one priority.” Uber have been pouring $1 billion a year in China, and despite this Uber couldn’t make big market share gains in the country. Finally Uber has waved the white flag and the battle between these two giants came to end which cost the two companies billions as they competed for customers and drivers.
- After losing in China Uber have to fight hard in India
For Uber India is booming market and it could be a new hope as the company now will be able devote more resources to India. Uber has already been spending aggressively in India to beat its rival Ola. Didi Chuxing which is trying to expand globally had picked up a stake in Ola last year, as a part of the $500 million round of financing raised by the Bengaluru-based company.
- What Indian taxi aggregators can learn?
Didi Chuxing was formed when China’s ride-hailing leaders Didi and Kuaidi came together to keep Uber away from Chinese market. Even Alibaba Group Holding Ltd. and Tencent Holdings Ltd., the country’s most valuable internet businesses backed the strategy which came out to be fruitful. Uber is known globally for competing ruthlessly against all comers, on this backdrop it would be interesting to see whether Indian taxi aggregators will come together to give fight to Uber.
- A Global message –China is a tough market:
Analysts call the Uber-Didi an acquisition and not a merger. It is said that Uber has clearly lost in China. Uber is not the first company which has to sell its business, earlier Google, Yahoo and eBay had tried their hands only to end up losing their operations to Chinese companies. In 2005, Yahoo had made a similar deal, selling its businesses in China to Alibaba. Analysts say that China is a tough market in terms of regulations and competition. The Uber deal also signifies that local players can win provided with a strong investment.
- Didi Chuxing to emerge as a global leader:
Earlier this year in February CEO and co-founder of Didi Chuxing had said that Didi will become the dominant global leader in ride sharing. Didi has already established multiple partnerships in the U.S. and Asia. According to Didi’s own statistics, it is already the largest ride share company in the world. It completed 1.43 billion rides in 2015, nearly twice as much as all taxi bookings in the U.S.