Uber is looking to merge its China operations with rival Didi Chuxing, according to a report. The two ride-sharing services have been bleeding money while trying to out compete each other; leaving neither with a profit from the last year.
Uber is said to have lost more than $2 billion in China, where the government has only recently legalised ride-sharing services. This stands in contrast to its activities in other countries; almost all of which have managed to turn a profit. The lack of revenue is largely attributed to having to compete with Didi, who control a majority of the ride-sharing market.
Combining the two ride-sharing companies in China will create a new entity worth some $35 billion. Investors in Uber China, which include Uber itself and Baidu, will receive a 20-percent share in the new company.
On the surface, this looks like Uber is throwing in the towel in China and walking away from operations there. This is particularly notable due to Didi’s involvement in a global alliance of ride-sharing services who aim to limit the reach of Uber. Other members of the alliance happen to be Lyft and Grab.
[Source: Bloomberg]
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