Uber to Sell to Rival Didi Chuxing and Create New Business in China

HONG KONG — Uber’s future in China seemed to hold promise.

Despite intense local competition, the market was one of Uber’s largest by total number of rides. A Chinese operation was the personal project of the Uber co-founder Travis Kalanick, who traveled regularly to the country and gave speeches that borrowed the jargon of Chinese Communist Party officials. His interest was backed up by billions of dollars in investment.

But on Monday, Uber, the ride-hailing company known globally for competing ruthlessly against all comers, waved the white flag.

In a stark signal of how difficult it is for American technology companies to thrive in China, Uber China said it was selling itself to Didi Chuxing, its fiercest rival there.

The sale, which would create a new company worth about $35 billion, would end the great ride-hailing battle of China. A person with knowledge of the deal said Uber investors had been pushing for such a transaction.

The companies have been fighting relentlessly for market share in mainland China for two years, spending tens of millions of dollars every month to attract riders and drivers. The merger would end that competition and create significant scale, but it would also be a repudiation of Uber’s ambitions to take on local Chinese competitors in their huge home market.

Uber had pushed its way into a country that has gone almost untouched by major American tech companies in recent years. Its progress was widely watched and discussed by entrepreneurs and investors alike as a model for how to reach China’s 600 million internet users — a forbidding prospect considering the country’s well-funded local competitors and regulations aimed at blocking foreign businesses.

With the deal, the company will join the ranks of American peers like Google and eBay, which were unable to capitalize on early footholds in China. EBay was outmaneuvered by Alibaba, while Google left China after it said it was the target of government-sponsored cyberattacks.