Didi to increase dominance via deal with Uber China

%3CP%20align%3Dcenter%3E%3CIMG%20style%3D%22WIDTH%3A%20500px%3B%20HEIGHT%3A%20182px%22%20border%3D0%20src%3D%22/new_maoyi_en/cn/admin/news/NewsFile/-1/20168295139568.jpeg%22%20width%3D500%20height%3D138%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EGraphics%3A%20GT%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EChinese%20ride-hailing%20service%20giant%20Didi%20Chuxing%20announced%20on%20Monday%20that%20it%20has%20reached%20a%20strategic%20agreement%20to%20acquire%20Uber%20China%2C%20a%20move%20experts%20said%20will%20strengthen%20Didi%27s%20dominant%20market%20position.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ESome%20have%20raised%20the%20question%20if%20the%20merger%20between%20Uber%20China%20and%20Didi%2C%20the%20two%20largest%20Internet%20ride-hailing%20platforms%20in%20China%2C%20would%20be%20subject%20to%20anti-monopoly%20reviews.%20%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EBut%20earlier%20data%20suggests%20that%20the%20merger%20between%20Uber%20China%20and%20Didi%20didn%27t%20reach%20the%20scale%20that%20would%20require%20anti-monopoly%20approval.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EChen%20Wei%2C%20a%20senior%20consultant%20with%20Beijing-based%20investment%20consulting%20firm%20ChinaVenture%2C%20said%20he%20thinks%20an%20anti-monopoly%20investigation%20seems%20unlikely.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20deal%20is%20poised%20to%20result%20in%20a%20de%20facto%20monopoly%20for%20China%27s%20ride-hailing%20industry%2C%20therefore%20to%20protect%20the%20interests%20of%20users%2C%20it%20is%20essential%20for%20the%20Ministry%20of%20Commerce%20to%20seek%20opinions%20from%20consumers%2C%20drivers%2C%20other%20industry%20players%20before%20giving%20a%20go-ahead%2C%20so%20as%20to%20prevent%20Didi%20from%20abusing%20its%20market%20dominance%2C%20Li%20Yi%2C%20an%20expert%20at%20the%20Internet%20Society%20of%20China%20told%20the%20Global%20Times%20on%20Monday.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAccording%20to%20rules%20published%20by%20the%20State%20Council%2C%20China%27s%20cabinet%2C%20in%202008%2C%20potential%20mergers%20are%20required%20for%20anti-monopoly%20reviews%20according%20to%20a%20two-part%20test%3A%20if%20total%20annual%20revenue%20generated%20in%20China%20of%20all%20the%20involved%20companies%20exceeded%202%20billion%20yuan%20%28%24301.34%20million%29%20and%20if%20at%20least%20two%20of%20the%20companies%27%20revenues%20each%20exceeded%20400%20million%20yuan.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EIn%202015%2C%20the%20revenue%20of%20Didi%20was%20over%206%20billion%20yuan%2C%20news%20portal%20toutiao.com%20reported%20in%20March.%20Uber%20China%27s%20revenue%20in%202015%20was%20unlikely%20to%20exceed%20400%20million%20yuan%2C%20according%20to%20a%20report%20by%20finance.qq.com%20on%20Monday.%20Therefore%2C%20the%20second%20condition%20wasn%27t%20met%2C%20and%20the%20merger%20between%20Uber%20China%20and%20Didi%20is%20not%20required%20to%20be%20submitted%20for%20anti-monopoly%20reviews.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20transaction%20will%20be%20conducted%20through%20a%20share%20swap%2C%20with%20Didi%20and%20Uber%20China%20becoming%20minority%20shareholders%20in%20each%20other.%20Uber%20China%20will%20hold%20a%205.89%20percent%20stake%20in%20Didi%2C%20according%20to%20a%20statement%20Didi%20sent%20to%20the%20Global%20Times%20on%20Monday.%20Didi%20didn%27t%20disclose%20its%20holding%20in%20Uber%20China.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAlibaba%20Group%20Holding%20and%20Tencent%20Holdings%20have%20invested%20in%20Didi%20while%20Baidu%20Inc%20is%20an%20investor%20in%20Uber%20China.%20After%20the%20deal%2C%20Didi%20will%20thus%20become%20the%20only%20company%20in%20China%20to%20have%20received%20investment%20from%20China%27s%20three%20Internet%20giants.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EA%20Bloomberg%20report%2C%20citing%20people%20familiar%20with%20the%20matter%2C%20said%20on%20Monday%20the%20deal%20values%20the%20combined%20business%20at%20%2435%20billion.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EFor%20years%2C%20both%20companies%20have%20spent%20big%20to%20lure%20customers%20in%20China.%20Uber%20China%20spent%20%241.5%20billion%20in%202015%2C%20while%20Didi%27s%20annual%20subsidies%20reached%20as%20much%20as%20%244%20billion%2C%20news%20portal%20jiemian.com%20reported%20on%20July%2025.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EBloomberg%20also%20mentioned%20that%20Uber%27s%20investors%20had%20been%20pressuring%20the%20company%20to%20stem%20the%20losses%20in%20China.%20A%20major%20aspect%20of%20the%20merger%20is%20cost%20cutting%2C%20said%20Chen.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20deal%20came%20within%20days%20of%20China%27s%20legalization%20of%20online%20car-booking%20services%2C%20and%20experts%20said%20the%20new%20regulation%20likely%20sped%20up%20the%20agreement.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EOn%20Thursday%2C%20seven%20government%20ministries%20led%20by%20the%20Ministry%20of%20Transport%20jointly%20issued%20a%20regulation%20on%20managing%20the%20online%20car-booking%20industry%2C%20which%20will%20take%20effect%20in%20November.%20The%20regulation%20makes%20China%20the%20first%20major%20country%20to%20legalize%20ride-sharing%20services.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EDidi%20said%20in%20an%20open%20letter%20last%20week%20that%20it%20welcomed%20the%20new%20regulation%2C%20but%20Li%20said%20that%20the%20deal%20puts%20Didi%20at%20a%20disadvantage.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20regulation%20establishes%20a%20general%20framework%20for%20the%20sector%20and%20allows%20local%20governments%20to%20decide%20things%20like%20fares%20and%20requirements%20for%20operating%20licenses%2C%20but%20Didi%20has%20already%20reached%20agreements%20with%20a%20number%20of%20key%20cities%2C%20which%20means%20its%20costs%20could%20be%20much%20higher%20than%20those%20of%20other%20operators%2C%20Li%20explained.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EBut%20according%20to%20Chen%2C%20with%20the%20legal%20status%20of%20ride-sharing%20services%20having%20been%20resolved%2C%20Didi%27s%20rivals%20in%20China%20will%20face%20great%20pressure%20from%20its%20dominant%20market%20share.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EIn%20the%20first%20quarter%20of%202016%2C%20Didi%20had%2085.3%20percent%20of%20the%20market%20in%20China%27s%20private%20car-hailing%20%26shy%3Bsegment%2C%20while%20Uber%20China%20only%20had%207.8%20percent%2C%20according%20to%20a%20report%20issued%20by%20Beijing-based%20data%20research%20institution%20CNIT%20Research.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CBR%3E%28Global%20Times%29%3C/FONT%3E%3C/P%3E