Uber investors push the company to call a truce with Chinese market leader Didi
Uber Technologies investors have a message for management: It’s time to wrap up the costly fight in China.
Several institutional investors are pushing the ride-hailing company to ink a partnership agreement with China’s market leader Didi Chuxing , according to people familiar with the matter, stemming the billions of dollars Uber is spending to expand in the region. Investors in Uber and Didi have discussed a potential deal, though the companies’ own executives would need to negotiate any truce, the people said, asking not to be identified as the discussions aren’t public. One Uber investor said he’s had more than 10 meetings and calls with Didi shareholders that want the companies to cut a deal.
He declined to discuss the identity of the investors. Uber and Didi are bleeding cash in China as they fight for dominance in the world’s most populous country. Uber has said that it is spending at least $1 billion a year to expand its business in the country. Both are giving out incentives for drivers and free rides to compete for market share.
Benchmark’s Bill Gurley — an Uber investor and board member — spoke briefly with Didi president Jean Liu at the Code Conference in Rancho Palos Verdes, California, a few months ago, according to a person familiar with the matter. Liu, who speaks fluent English unlike Didi CEO Cheng Wei, has made several trips to the US, where she evangelizes for the company and meets with backers including Apple Inc . The people declined to discuss whether the conversations included explicit talk of a deal or partnership. The two companies are not currently discussing a deal, a separate person familiar with the matter said.
With both companies asserting their intent to grow independently, executives at Uber and Didi are concerned that appearing open to a deal could undercut their negotiating leverage with each other, the people said. Didi is in the lead on its home turf, with 14 million drivers signed up in 400 Chinese cities. Uber has set a target of operating in 100 cities this year.