Uber rips off Chinese arm, swaps it for share in successful rival – reports
Billions wasted on gaining ground in Middle Kingdom market
After pouring over two billion dollars into its Chinese operations, Uber has thrown in the towel and is set to sell its Chinese arm to a local rival, according to reports.
The deal, which will be announced this week, will see Didi Chuxing acquire Uber's Chinese subsidiary and plough $1bn into the global ride-hailing business.
Investors in Uber China will in turn receive a 20 per cent stake in Didi Chuxing, according to a report by Bloomberg, which broke the news.
The businesses will merge to form one, er, uber-business worth $35bn, according to people familiar with the matter. Uber's CEO, Travis Kalanick, was reportedly one of the driving minds behind the deal, and is said to have brought it up with Cheng Wei, the founder of Didi Chuxing, when they met in Beijing more than two years ago.
Investors have put pressure on Kalanick after Uber lost billions subsidising drivers and passengers in the Middle Kingdom to win a decent portion of the ride-hailing market. The business now exits that market for $7bn, which will be shared with investors including Baidu.
The move follows Apple's investment in Didi Chuxing after equally failing to win financial territory in China. Apple ploughed $1bn into Didi back in May, in what the Cupertino-based company's Tim Cook described as "a chance to learn more about certain segments of the China market".
In removing some red from its bottom line, Uber is cleaning up its act for an eventual IPO, though that seems to be quite some way away with Kalanick continuing to invite investments - mostly recently from Saudi Arabia’s sovereign wealth fund. ®