Uber sells Chinese business to Didi Chuxing

Image copyright Getty Images

Image caption US-based Uber launched in China in 2014

Taxi-booking app Uber has agreed to sell its business in China to rival Didi Chuxing.

Uber"s China business will retain its separate branding, and Uber"s global business will receive a 5.9% stake in the combined company, Didi Chuxing said.

Uber China launched in 2014 but so far has failed to make any profit.

The two companies have been fierce competitors for years, but Didi Chuxing dominates the market.

Didi Chuxing says it provides more than than 14 million journeys a day and claims to have 87% of the market share in China.

The company is backed by Chinese internet giants Tencent and Alibaba, and has also invested in Uber"s rival US taxi-booking service Lyft.

Big losses

"Funding their China dreams was becoming too expensive for Uber," Duncan Clark, chairman of Beijing-based consultancy BDA, told the BBC.

"Many saw it as an obstacle to their own IPO (Initial Public Offering)."

Uber has been struggling to break into the Chinese market despite having Chinese search engine Baidu as an investor.

In February, the company admitted it was losing more than $1bn a year in China, spending huge sums to subsidise discounted fares.

Image copyright AFP

Image caption Didi Chuxing is the clear market leader in China

Didi Chuxing in brief:

• China"s number one taxi-booking app.


• Claims to have an almost 90% market share and some 14 million journeys every day.


• The company is the product of a merger: In February 2015, Didi Dache and Kuaidi Dache merged to form Didi Kuaidi, later renamed Didi Chuxing.


• It is the driving force behind an alliance with India"s Ola, South East Asia"s Grab and US firm Lyft, allowing users to use their apps to hail from the partner services when abroad.

"One thing to watch carefully is how quickly consumers feel the impact as subsidies are withdrawn," Mr Clark added.

The fierce rivalry had led both companies to heavily subsidise their journeys. The merger is likely to see fewer such subsidies.

New rules

The deal with Didi Chuxing comes just days after China agreed to provide a legal framework for taxi-ordering apps.

Both Uber and Didi have welcomed the decision, having previously operated in a legal grey area in the country.

While the apps are widely popular, they have undermined business for normal taxis and have been met with protests by cab drivers.

The new rules will take effect on 1 November and will, among other things, forbid such platforms to operate below cost.

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Uber sells Chinese business to Didi Chuxing
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