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Uber Calls Time on Winning in China

Jim Riley

4th August 2016

The challenge of achieving market share in China is beautifully illustrated by the battle that Uber has been facing against local rival Didi. After many billions of losses, Uber has finally decided to end the battle with Didi and agreed a sale of its operations to the Chinese rival in return for a 20% stake in Didi.

Travis Kalanick, the CEO and Co-Founder of Uber, has written about why Uber has decided to do the deal with Didi here on his Uber blog:

A key quote highlights the main strategic reason for the deal:

"Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term."

In other words, there could only be one market leader in China, and Uber simply couldn't afford to continue losing billions of dollars there when it became clear that Didi was going to win the battle.

Interestingly, Apple invested heavily in Didi recently alongside Alibaba and Tencent. So Uber was never going to be able to beat Didi simply by having deeper pockets.

Lex on Uber/Didi deal

Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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