Uber's Chinese affiliate managed to raise $1 billion to expand its presence in China, allowing it to better compete against Chinese rival Didi Kuaidi.
Just two months ago, Uber officially launched its fundraising campaign seeking a $1 billion investment fun for its Chinese affiliate, and it has now closed the round early after securing the funds. According to reports, the funding investors have agreed upon would value UberChina at roughly $7.5 billion.
As Reuters reports, citing two people familiar with the matter, the main players that led this round of funding for UberChina are Asia hedge fund Hillhouse Capital, China's Baidu search engine and Chinese investment bank conglomerate Citic, among others.
With the help of local investor, UberChina could get more notable allies in the country, which would be a great achievement considering that China is its largest market outside the U.S. At the same time, Uber also faces its toughest competition in China.
Didi Kuaidi enjoys the support of top Internet companies in China, including Alibaba and Tencent Holdings, and is planning to further expand in the country. Back in July, Didi Kuaidi managed to raise $2 billion in just two weeks and competition with Uber in China is expected to heat up.
Uber, for its part, plans to spend the newly-secured $1 billion towards its expansion in China, aiming to get in the good graces of the Chinese government. China has made it quite tough so far for U.S. technology companies to expand in the region, but Uber continues its push nonetheless. Just last year, Uber and China's Baidu agreed upon a strategic partnership, but more efforts are necessary.
The Chinese media, meanwhile, revealed that investors were a bit skeptic when it came to supporting Uber's Chinese branch, although they are backing the company globally. The reason behind this skepticism is the aforementioned rocky collaboration between the Chinese government and U.S. companies planning to expand in China. With the all of the limitations and conditions the Chinese government is setting for U.S. companies, very few have managed to actually reach the Chinese market successfully.
With foreign companies facing difficulties in penetrating the market, China's Didi Kuaidi has a notable edge, not to mention that it also dominates this segment of the Chinese market with a 70 - 80 percent share. At the same time, Didi Kuaidi backer Tencent has moved against Uber recently, blocking the app from the messaging service WeChat.
Consequently, it could be quite difficult for Uber to expand its presence and boost its relevance in China, but the new funding nonetheless gives it a notable boost.