Investors Want Uber, Didi To Halt China Squabble

A group of behind-the-scenes investors are pushing to have Uber cease its escalating war with Didi Chuxing, China’s largest taxi cab-hailing company, over control of the lucrative Chinese marketplace because they fear it is costing the company too much money, according to a Bloomberg report.

Sources told Bloomberg that Uber was spending “billions” on its China expansion but facing an uphill challenge from Didi.

Didi, formed by the merger of two rival companies, Didi Dache and Kuaidi Dache, is backed by China’s two largest internet companies, Tencent and Alibaba. The privately held company, which is worth an estimated $28 billion, has signed up 14 million drivers in China and currently operates in 400 cities. Didi says it has $10 billion in cash on hand to fend off Uber’s encroachment into its China territory.

But Bloomberg reports that both Uber and Didi are “bleeding cash” as they fight for control of the China market, with Uber recently acknowledging that it is spending at least $1 billion a year on its China expansion.

Uber, also privately owned, is worth an estimated $68 billion and has access to about $11 billion in cash and equity. Uber has pledged to operate in 100 Chinese cities by the end of the year, but it is unclear how many drivers it has signed.

But Bloomberg said investors on both sides are pushing for a truce and a partnership, although it remains to be seen which side would want to step to the negotiating table first or who might be willing to cede what.

Didi has more experience with partnerships than Uber, but that could also be part of the problem. Didi has a $100 million investment in Uber’s largest U.S. competitor, Lyft.

“Stemming losses in China is one of the main things holding up Uber’s potential initial public offering, according to people familiar with the matter, alongside the company’s regulatory battles,” according to Bloomberg.