Uber, one of the world’s leading technology companies in the area of the transportation network, has decided to merge its Chinese company, UberChina with its rival, Didi Chuxing. After spending more than three years in China as an independent company, the San Francisco-based taxi-hailing company has decided that it best operates as a merged company. A number of factors can be attributed for this interesting turn of events.
Uber is engaged only on private car rides in one of the world’s largest economies. On the other hand, Didi has provided the flexibility to users to be picked up by taxis, cars, vans, or buses. Another amazing fact about Didi is that it handled, on an average, around eleven million rides daily in 2015 compared to only one million rides daily which Uber handled.
Back in the day, Uber spent nearly one billion dollars to compete with Didi. This is a huge sum of money because this is how much Uber earned per year in its top thirty cities all over the world. Didi has the backing of major tech companies like Alibaba Group and Apple.
The deal is that Didi Chuxing will end up owning UberChina’s brand, the entire operations, and customer’s data in China. The company’s CEO, Travis Kalanick , wrote in a statement saying that “As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart.”
As part of the deal, Uber will receive close to six percent of the merged company and the combined valuation will be around thirty-five billion dollars.
China is a pretty tough country to compete in. There is a lot of competition, the country’s culture is unique and is regulated. With Uber merging its Chinese company, it has now got a significant stake in the country’s largest player.
With this one American company being taken over by its Chinese company, do we see a trend that is arising? Only time will tell. But it is sure that China is clearly announcing that no one comes to their country and tries to upset the established order. Not even a $62.5 billion worth company.