Monday, August 1, 2016

Uber throws in the towel in China – Obs

Beijing (AFP) – Didi Chuxing, Chinese main application of booking vehicles with driver, will acquire the operations of his Uber rival in China, the US juggernaut of VTC throwing in the towel after a ruinous battle on this huge market … but not profitable for him.

in exchange for its assets in China, Uber will receive shares equal to 20% of the merged entity, explained Monday the two companies in separate statements . The total value of the new group will total $ 35 billion according to Bloomberg News.

This is the end of a fierce war and ever more expensive between the two rivals in which the Californian giant will engulfed billion to scrounge units of a booming market

Uber decided to stop spending. by stemming the haemorrhage of capital and massive losses in China, US be able to generate investment margins and position themselves for a future stock exchange listing

The boss-founder of Uber Travis Kalanick has also welcomed on Facebook at length. “as soon as talked about our efforts in China, most people we were naive or crazy, or both at once, “he recalled, before citing the dramatic advances Uber.

Arrival early 2014 in the country, the company is now present in sixty cities, with over 40 million trips registered every week

-. “formidable opponent” –

certainly Didi Chuxing, with some 300 million registered users across 400 cities, dominated last year 99% of the Chinese market for online taxi bookings and 87% of reservations for private cars with driver.

But in this niche, Uber arrogates now between 10 and 15% market share –in shot of huge investments, largely subsidizing trips of users.

An effective strategy but expensive: Mr. Kalanick revealed in February that his company burned “over a billion dollars” per year in China

“I have learned that success had to listen as her head. his heart. Serve sustainable Chinese cities is only possible with a profitable business, “he finally acknowledged Monday, calling Didi of” formidable opponent “.

Didi was forced to adopt a similar strategy, showing himself very generous subsidies to maintain its market share and multiplying spectacular fundraising: the last looped end of July, representing $ 7.3 billion Among its “strategic” investors face the juggernaut of American. Apple.


Didi Chuxing, born in 2015 from the merger of two competing applications supported respectively by Chinese internet giants Alibaba and Tencent, also attempts to strengthen its alliances abroad.

It took last year’s investments in the Indian taxi booking app (Ola) and in the US Lyft, Uber rival the United States: a situation that he will now manage with his new partner.

in China itself, Uber will continue to operate under its name with its own application, while the iconic Travis Kalanick will join the board of Didi Chuxing. .. Uber which will now be the main shareholder.

the Chinese group however says he will get “a minority stake” in Uber. According to Bloomberg, Didi will invest $ 1 billion in Uber, valuing the group at California $ 68 billion

-. Beijing conciliatory with VTC –

The merger announcement comes by Moreover just after full legalization late July by Beijing vehicle booking applications –a decision driver countdown increasing hardening observed in Europe

for some conditions, however. tariffs to below real operational costs are thus prohibited, enough to jeopardize the model of growth “by subsidies” at a loss.

anyway, besides a stable regulatory environment, the merged group will have a quasi monopoly -absolu China. Under these conditions, a Beijing driver, Mr. Su, is alarmed to AFP a likely “reduced premiums” he received from Didi.

Similarly, end of the “subsidy war” between Uber and Didi should lead to a sharp increase in prices for passengers worried number of Chinese Internet users.


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