Uber's Exit from China: A Raw Deal?
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Case Code: BSTR504 Case Length: 11 Pages Period: 2013-2016 Pub Date: 2016 Teaching Note: Available |
Price: Rs.400 Organization: Uber Industry: Chinese Taxi Market Countries: China Themes: -- |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In early August 2016, after a fierce three-year battle for the Chinese ride hailing market, Uber, the world leader in the ride hailing service, sold its subsidiary, UberChina, to its chief opponent Didi Chuxing, (Didi). As per the deal, Uber received a 17.7 percent stake in the combined company’s equity but got only 5.9 percent of the voting rights. Uber China’s main investor, Baidu, got a 2.3 percent stake in Didi. Travis Kalanick (Kalanick), co-founder of Uber, was given a seat in Didi’s board while Didi’s CEO Cheng Wei, got a seat in Uber’s board. The deal came as a big surprise to everyone concerned, as Uber had invested over $2 billion in China. Even a week before the deal, it was considered just unthinkable.
Uber’s surrender in China surprised industry experts as the company was a game changer in the taxi industry and was gaining market share around the world. They wondered whether Uber had run out of options in China and whether this was the best thing for it to do, given the circumstances and whether it got a good deal.....
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