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HBS Professor William C. Kirby, Research Associate Yuanzhuo Wang, and Doctoral Students Shuang L. Frost and Adam K. Frost (Harvard
University) prepared this case. This case was developed from published sources. Funding for the development of this case was provided by
Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve
as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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W I L L I A M C . K I R B Y

Y U A N Z H U O W A N G

S H U A N G L . F R O S T

A D A M K . F R O S T

Uber in China: Driving in the Gray Zone (B)

“Fast forward to today and Uber China—in just two years—has exceeded even my wildest dreams. We’ve
grown super fast and are now doing more than 150 million trips a month. This is no small feat given that most
U.S technology companies struggle to crack the code there. That’s why I’m so proud of what our amazing China
team has accomplished.”

— Travis Kalanick, announcing Uber China’s merger with Didi Chuxing, August 2016

On August 1, 2016, Uber shocked the global ridesharing industry when it announced that it would
sell its operations in China to its competitor, Didi Chuxing.1 As part of the deal, Uber would receive a
20% stake in Didi, while Didi would invest $1 billion in Uber.2 In the announcement, Travis Kalanick
complimented Uber’s “amazing China team” and declared that he had “no doubt that Uber China and
Didi Chuxing will be stronger together”.3

For two years Uber had fought an intense, costly battle for China’s ridesharing market. Although
Uber had made China central to its future growth strategy, the company faced unanticipated
competition from agile, well-financed, and well-connected domestic Chinese competitors.

During this time, Uber also had to respond to an ever-shifting regulatory landscape. It was only on
July 28, 2016, that China’s State Council released the first national level guidelines for regulating online
ridesharing services and “recommendations” for improving the existing taxi industry. While the new
regulations granted legal status to ridesharing services like Uber and Didi Chuxing, local governments
were also given the discretionary power to ban ride-sharing subsidies and implement government-
guided pricing as necessary.4

Given the competition from domes