Didi Buys Uber in China

Davey Alba for WIRED:

Uber, the biggest ride-hailing company in the world, is set to merge its business in China with Didi Chuxing, the homegrown ride-hailing favorite in the world’s most populous country, according to the two companies.

More specifically, Didi will buy Uber China, Uber’s Chinese branch, acquiring all its operations. Uber will exit the country, though Uber will continue to oversee its own app. After the merger, Didi will be worth $35 billion, a significant lift in valuation even after the financial boost it got when Apple agreed to invest $1 billion back in May.

Here’s an interesting comment from Uber’s CEO regarding the merger:

“As an entrepreneur, I’ve learned that being successful is about listening to your head as well as following your heart,” Uber CEO Travis Kalanick wrote in a blog post explaining the merger. “Uber and Didi Chuxing are investing billions of dollars in China and both have yet to turn a profit there.”

Monopolization + struggling to turn a profit? Wonder what that’ll mean for prices. (Also factor in the growing upper-middle class.)

Still, this is the first battle Uber has truly lost. And it shows that at least so far, no US tech company has successfully figured out how to unseat its Chinese counterpart in China, no matter how hard it was willing to try—or how much it was willing to spend.

This totally undermines how much Apple is ingrained in today’s China as a premium brand. I don’t see Xiaomi finding a way to totally knock down Apple as long as the quality of their products and retail experiences remain unchallenged. Tesla seems to be finding its way up, too, opening up dealers in premium locations.

Uber totally failed because of the nature of their product: while undoubtedly complex, it’s still easy to replicate. Thanks to China’s weak IP laws, Uber couldn’t stand a chance.

Source: WIRED