In China, A Battle Uber Didn't Win : Parallels Uber's China arm merged with its rival Didi Chuxing this week, creating a $35 billion ride-hailing colossus. The merger ends an era of brutal competition, and may help boost China's flagging economy.

In China, A Battle Uber Didn't Win

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Uber saw an opportunity when it brought its ride-hailing business to China. Not surprisingly, it's the world's largest market for companies like Uber, but China has its own ride-hailing business. And this week, Uber sold out to a local rival. Here's NPR's Anthony Kuhn in Beijing.

ANTHONY KUHN, BYLINE: The ride-hailing business in China is dominated by a local company called Didi Chuxing. Didi itself was born from the merger of two companies backed by China's internet giants, Alibaba and Tencent.

I just hailed a Didi driver. We're just going to tool around the block here. And I'm going to talk to him about what he thinks about the merger and how his job's going.


KUHN: My driver is 33-year-old Wang Xiaoliang. He's been driving for Didi for about six months now, and he thinks the merger is good for everyone.

COMPUTER GENERATED VOICE: (Foreign language spoken).

KUHN: As his navigation system guides us through the rush-hour traffic, Wang says the competition between Didi and Uber has been just brutal. He says both companies have offered passengers huge discounts.

WANG XIAOLIANG: (Through interpreter). I heard that one day Uber was giving rides at a 90 percent discount. On that day, we Didi drivers could hardly get any riders at all.

KUHN: Some observers see the merger as a setback for Uber. It spent about a billion dollars in China last year, but it only got a market share of around 10 percent to Didi's more than 80 percent. Some analysts believe that Uber's bid to go it alone in the China market was an uphill battle.

KITTY FOK: Partnership is extremely important. It's just because the culture is very different in China.

KUHN: Kitty Fok is managing director of IDC China, a consulting firm. She says that Didi has the home-court advantage. It commands more name recognition in China, and it's been faster at offering new services that consumers want, such as buses and carpools. She adds that both Didi and Uber have succeeded in convincing the government that they can help with China's transition away from heavy industry towards consumer services. The government dubs the strategy Internet Plus.

FOK: Which is really to make use of the internet to create more innovation as well as to create more job opportunity.

KUHN: The ride-sharing industry's lobbying appears to have worked. China's government issued regulations last week legalizing the ride-hailing business despite opposition from taxi companies. And as the government shuts down excess steel and coal plants, laid-off workers are migrating en masse to the ride-hailing business. Zhu Wei is an internet expert at the China University of Political Science and Law.

ZHU WEI: (Foreign language spoken).

KUHN: "Didi is adding on 400,000 new drivers a day," he says. "That's more than the entire population of Iceland."

Kitty Fok notes that the deal may have been helped by an interesting personal connection between Uber China and Didi.

FOK: The head of Uber China and head of Didi - they're actually cousin. So they, themselves, have a very close relationship.

KUHN: Uber China's Liu Zhen and Didi's Liu Qing are, respectively, the niece and daughter of Liu Chuanzhi, the founder of the Lenovo Group, the company that bought IBM's personal computer business. So you could say the merger is just a way of keeping the competition - and most of China's ride-hailing business, for that matter - all in the family, the Liu family to be precise. Anthony Kuhn, NPR News, Beijing.

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