Uber's Unprofitable Chinese Operations to Merge with Main Competitor

The company was losing a billion dollars per year in China, reports said.

— -- Facing stiff competition in China, Uber announced today that it will merge its operations there with its main competitor, potentially ending the company’s unprofitable foray in that vast market.

Uber CEO and co-founder Travis Kalanick made the announcement in a blog post on the company’s website that also referred to the company's main competitor in the country: “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,” he added.

In a letter from Kalanick to the UberChina team that was later posted on his Facebook page, the CEO was candid about challenges his company faced: “Didi has been a fierce competitor and I respect all that Didi and their team have accomplished.”

Didi Chuxing said in a statement that it would be acquiring UberChina’s brand, business operations and data for use on the country's mainland. It said Uber will hold a 5.9 percent stake in the new, combined company and that Didi would “also obtain a minority equity interest in Uber”.

Reports suggest that Uber had been losing heavily in China. In February, Kalanick told BetaKit.com that its losses there exceeded $1 billion per year.

Bloomberg News, which first reported the merger, said that “Uber’s investors had been clamoring for the company to sell off its China assets and focus on more promising opportunities.”