Uber’s Chinese Rival Acquiring Company’s China Operations

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Didi Chuxing said it would take over all of Uber China and operate it as a separate brand, with Uber receiving stake in the enlarged Didi.

Uber Technology Ltd.’s main Chinese rival said Monday it is acquiring the U.S. ride-hailing service’s China operation in a deal that links the companies following a costly battle to attract riders.

Didi Chuxing’s announcement marked the latest surrender by a foreign technology brand in the face of intense competition in China. Yahoo, eBay and others also have turned over local operations to Chinese partners or withdrawn.

Didi Chuxing said it would take over all of Uber China and operate it as a separate brand. Uber will receive a stake in Didi Chuxing and Uber founder Travis Kalanick will join the Chinese company’s board while Didi Chuxing founder Cheng Wei joins the Uber board, it said.

“This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level,” Cheng said in a statement.

Ride-hailing services in China have grown fast but suffered heavy losses as they fought to attract customers. Kalanick told the Canadian technology platform BetaKit in February the company was losing $1 billion a year in China.

Foreign technology brands have struggled in China’s populous but intensely competitive market. Wal-Mart Stores Inc. sold its Chinese online operation in June to JD.com Inc., the country’s No. 2 e-commerce service.

Didi was formed by the February 2015 merger of competing ride-hailing services launched by Chinese internet giants Tencent Holdings Ltd. and Alibaba Group following a similar battle for customers.

Monday’s announcement came after the Chinese government last week announced its first rules for the ride-hailing industry, confirming the legal status of the industry after repeated run-ins with regulators.

Uber, headquartered in San Francisco, operates in more than 60 Chinese cities and plans to increase to more than 100 by the end of 2016.

Didi Chuxing, previously Didi Kuaidi, operates in some 400 Chinese cities. It said the company completed 1.4 billion rides in 2015.

Didi Chuxing said in June it raised $7.3 billion from investors in what it described as one of the world’s largest private equity funding rounds.

That included $1 billion from Apple, which became a strategic investor alongside Tencent and Alibaba.

Last September, Didi Chuxing and Lyft agreed to link their services to allow travelers to use them in each other’s markets. In December, their alliance added India’s Ola and Southeast Asia’s GrabTaxi.

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