Didi's takeover of Uber sparks monopoly,fare concerns in China

 Chinese ride-sharing giant Didi's takeover of country operations of its US rival Uber has triggered worries of potential monopoly and fare hikes among the public who are used to highly subsidised fares offered by both the firms due to cut-throat competition.

The on-demand mobility (ODM) firm Didi yesterday announced it was taking over Uber China, in a deal that could see the combined Chinese firm valued at USD 35 billion. The US-based firm will take a 5.9 per cent stake in Didi, which in turn did not disclose the stake it will take in Uber.

Under the deal, that follows China's recent legalisation of ODM services, Uber China will continue to operate independently, and though some experts have called the end to the fierce competition as "reasonable", many have warned of a monopoly that could result in higher prices.

The deal is not subject to anti-monopoly review by China's cabinet as both have not made profits and Uber China's revenue did not reach the review threshold, Didi said.

However, the takeover would in fact create a monopoly as the two might have more than 90 per cent of the market share in China, said Wu Weiqiang, vice president of the Hangzhou Institute for Reform and Development.

Monopoly could reduce competition and result in higher prices for more profits, said Zhou Hanhua, a researcher with the Chinese Academy of Social Sciences.

Passengers and drivers are also worried that they will lose benefits following the deal.

"I am worried about fewer discounts and higher fees," said Wang Rong, a 27-year-old resident of Hangzhou, capital of east China's Zhejiang Province.

"I hope my salary will not decrease in the future," said Shen Yangfei, a Hangzhou driver.

Ye Yun, a public relations representative for Didi, told state-run Xinhua news agency that discounts for passengers and drivers will continue "for a long time".

"On-demand taxi-hailing services have just started in China," said Yang Jianhua, head of the Public Policy Research Institute of the Zhejiang Academy of Social Sciences. "There is very high potential in many aspects of this business."

The two companies have been locked in a bitter battle for customers in China marked by huge discounts since last year. Didi has strong capital support, while Uber has unique data processing technology and capital operations, and is one of a few foreign tech firms that has been able to compete with domestic rivals head-on in China.

While Didi has the majority of China's ODM services, Uber has managed to establish a foothold and made inroads in lower-tier cities this year.
In June, Didi announced it had secured USD 7.3 billion in equity and debt financing, including USD one billion from Apple, which valued the company at around 28 billion dollars. Uber secured over USD six billion in its latest funding round.

Liu Zhen, Uber's China head of strategy, said in June that most of the money would fund operations in China.