Uber Technology Ltd has decided to merge its China operations with rival Didi Chuxing, creating a $35 billion mobility giant in the country.
According to a report in the AP, Didi Chuxing would acquire Uber China and operate it as a separate brand. In exchange, Uber will receive a 20 percent stake in Didi Chuxing that will make the American company its biggest shareholder. Uber founder Travis Kalanick will join the Chinese company's board while Didi Chuxing founder Cheng Wei joins the Uber board.
After the deal that brought an end to a bruising battle for share in one of the toughest markets, Kalanick sent an email to Uber's China team, explaining the rationale for the move. It also shows entrepreneurship is all about negotiating the unchartered territories, and giving up at the right time. It is also a tribute to the entrepreneurial spirit of the Chinese and their enthusiasm for innovation.
The email has been shared by Kalanick on his Facebook page. "I sent an email to my UberChina team regarding the merger of UberChina and Didi. I thought I would share here on the news and what has been one of the most rewarding experiences I've had as an entrepreneur," he said on FB.
Here's the full text of the email as shared by Kalanick:
I wanted to let you know that we have reached an agreement to merge UberChina with Didi Chuxing. UberChina's value will represent a 20% stake in the combined entity with Uber being Didi's largest shareholder.
Let me explain why we are doing this.
Three years ago, a small group of us went on a scouting mission to Beijing to see how we could expand into China.
It was a big, bold idea, especially given that Uber was still a relatively small start-up and no one in China had ever even heard of us. And of course, anytime we got into a discussion about our efforts in China, most people thought we were naive, crazy – or both. We saw things differently of course. China is an inspiring country with astonishing opportunity. Many of the world’s mega cities are Chinese, and their thirst for transportation innovation is second to none. Uber’s mission to make “transportation as reliable as running water, everywhere for everyone” resonates especially strongly in China.
Being an entrepreneur means you are an explorer by nature, doing what everyone thinks is impossible but with an optimistic perspective on the unknown. Uber entered this uncharted territory in February 2014, two years after Didi was founded. We were a young American business entering a country where most US internet companies had failed to crack the code, and with a product that needed rebuilding. Our China effort has been one of Uber's most entrepreneurial because we literally had to start from scratch.
Since launching just over two years ago, we have expanded to over 60 cities in China and we are serving over 40 million rides per week. Our team is now 800 strong, nobly serving their cities. Our philosophy on people has always been to hire the best of the best and our incredible success in China is due to all of you. You are the smartest and most entrepreneurial sons and daughters of China whose mission has been to build a transportation system in every Chinese city, and to serve those cities and to serve the people.
In the startup community in Beijing and across China, our people and our systems for empowering them have set the gold standard for Chinese technology companies. Your efforts -- and the efforts of our China engineering and product teams back in San Francisco -- have not only been been an inspiration to our thousands of employees globally but to me personally.
However, as an entrepreneur, I’ve learned that being successful is about listening to your head as much as following your heart. Sustainably serving China’s cities, and the riders and drivers who live in them, is only possible with profitability. This merger paves the way for our team and Didi’s to partner on an enormous mission, and it frees up a substantial resources for bold initiatives focused on the future of cities -- from self-driving technology to the future of food and logistics.
Uber is a better, stronger company because of our China experience. Didi has been a fierce competitor and I respect all that Didi and their team have accomplished. UberChina certainly rose to the occasion and your hustle and work ethic is the stuff of legend. Working with and learning from all of you in this remarkable China journey has been one of the great experiences in my life.
I want to thank Yanqi, Kate, Gang, Cleo, Zhen, Allen and the entire UberChina team for getting us to this point. A big shout out as well to our UberChina product and engineering team, led by Han, Vinay and Pedram, for all their hard work and creativity. China was a big bet for us and I’m incredibly proud of everything we have achieved. I will be doing an All Hands to talk to you all about our new journey forward, and how we will work with our new partner in serving China and her cities. Stay tuned for the exact time--Allen will send a note around shortly.
With much UberChina love,
Updated Date: Aug 02, 2016 09:28:28 IST