Here’s Why China Will Approve the Didi Chuxing-Uber Deal

A taxi passes by an Uber station outside a shopping mall in Beijing on August 1, 2016. Ride-sharing giant Uber is to merge its China operations with local rival Didi Chuxing, reports said on August 1, ending a ferocious battle for market share in the world's second-largest economy. / AFP / STR (Photo credit should read STR/AFP/Getty Images)
AFP/Getty Images

In a somewhat surprising admission, one of China’s anti-trust regulators said it needs to review Uber China’s sale to Didi Chuxing but hadn’t received the paperwork.

China’s commerce ministry—known as Mofcom—said it would review the deal, which values a combined company around $35 billion (Didi is valued at $28 billion; Uber China $7 billion) and would create a company with near monopoly status, Reuters reported today.

“Mofcom has not currently received a merger filing related to the deal between Didi and Uber,” a Mofcom spokesman said.

The biggest surprise is that Didi didn’t consult with Mofcom before the announcement came out yesterday.

Still, Mofcom will probably approve the deal anyway.

One of the reasons attributed to Didi’s success in China, and its defeat of Uber China in a two-year long battle, is the close relationship it enjoy with governments. China Investment Corp., the country’s sovereign wealth fund, backs Didi, and Didi heavily lobbied the government as new ridesharing policies were being drafted this year.

The odds of Uber’s deal to sell its China operations to Didi being held up by the regulator are low because of this same point. The Mofcom flap may have been the result of the Uber deal being announced a couple days earlier than planned—a quickly solved oversight.


Uber’s retreat from China ultimately benefits the local player in Didi, and Mofcomhas previously served China’s interest. In 2013 it would only approve commodity firm Glencore’s acquisition of miner Xstrata if a Peruvian copper mine owned by the company and desired by the Chinese went up for auction. A Chinese state-owned company now runs the mine.

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