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| Uber to merge China business with rival Didi Chuxing, reports say | Uber to merge China business with rival Didi Chuxing, reports say |
| (35 minutes later) | |
| Ride-hailing firm Uber has reportedly agreed to merge its business in China with much bigger rival Didi Chuxing. | Ride-hailing firm Uber has reportedly agreed to merge its business in China with much bigger rival Didi Chuxing. |
| According to Bloomberg, the $35bn (£26bn) deal will give Uber China, which is owned by US-based Uber, Chinese internet giant Baidu and others, a 20% stake in the company. | According to Bloomberg, the $35bn (£26bn) deal will give Uber China, which is owned by US-based Uber, Chinese internet giant Baidu and others, a 20% stake in the company. |
| Uber China launched in 2014 but so far has failed to make any profit. | Uber China launched in 2014 but so far has failed to make any profit. |
| The two have been fierce competitors for years but Didi Chuxing has remained the dominant market leader. | |
| As of May, Didi Chuxing said it provided more than than 11 million rides a day and claims to have 87% of the market share in China. | As of May, Didi Chuxing said it provided more than than 11 million rides a day and claims to have 87% of the market share in China. |
| The company is backed by Chinese internet giants Tencent and Alibaba, and has also invested in Uber's rival US ride-sharing service Lyft. | The company is backed by Chinese internet giants Tencent and Alibaba, and has also invested in Uber's rival US ride-sharing service Lyft. |
| Big losses | Big losses |
| "Funding their China dreams was becoming too expensive for Uber," Duncan Clark, chairman of Beijing-based consultancy BDA, told the BBC. | |
| "Many saw it as an obstacle to their own IPO (Initial Public Offering)." | |
| Uber has been struggling to break into the Chinese market despite having Chinese search engine Baidu as an investor. | Uber has been struggling to break into the Chinese market despite having Chinese search engine Baidu as an investor. |
| In February, the company admitted it was losing more than $1bn a year in China, spending huge sums to subsidise discounted rides. | In February, the company admitted it was losing more than $1bn a year in China, spending huge sums to subsidise discounted rides. |
| "One thing to watch carefully is how quickly consumers feel the impact as subsidies are withdrawn," Mr Clark added. | |
| The fierce rivalry had led both companies to heavily subsidise their rides. The merger is likely to see fewer such subsidies. | |
| New rules | |
| The reported deal with Didi Chuxing comes just days after China agreed to provide a legal framework for ride-hailing apps. | The reported deal with Didi Chuxing comes just days after China agreed to provide a legal framework for ride-hailing apps. |
| Both Uber and Didi have welcomed the decision, having previously operated in a legal grey area in the country. | Both Uber and Didi have welcomed the decision, having previously operated in a legal grey area in the country. |
| While the ride-hailing apps are widely popular, they have undermined business for normal taxis and have been met with protests by cab drivers. | While the ride-hailing apps are widely popular, they have undermined business for normal taxis and have been met with protests by cab drivers. |
| The new rules will take effect on November 1 and will amongst other things forbid ridesharing platforms to operate below cost, also likely to restrict the scope to offer subsidies. |