Uber Bows Out of China

Uber has bowed out of the costly ride-sharing war in China.

Bloomberg first reported Didi’s acquisition of Uber’s Chinese properties:

Didi will buy Uber’s brand, business and data in the country, the Chinese company said in a statement. Uber Technologies and Uber China’s other shareholders, including search giant Baidu Inc., will receive a 20 percent economic stake in the combined company. Didi founder Cheng Wei and Uber Chief Executive Officer Travis Kalanick will join each other’s boards.

To compete in China, Uber was reportedly losing $1,000,000,000 per year. Even by the standards of a company valued over $50B, that’s a lot of money to lose.

Uber has changed the way people travel around the world. As it streamlines its American operations — lowering prices and increasing ridership — Uber will likely invest heavily in other emerging markets: India, South America, and the Middle East.

For entrepreneurs, Didi’s acquisition highlights an important point — entrepreneurs who are close to the problem have a significant advantage. In this case, Didi’s lineage as a Chinese company clearly advantaged it over the American competitor.

Entrepreneurs should solve problems they know intimately. When that happens, even well funded competitors start from behind. The rest depends on radical, opportunistic execution.