Uber has decided to sell its China business barely a year after its chief executive had described that country as its No. 1 priority.
The buyer is a Chinese competitor—Didi Chuxing. Uber will get a minority stake in the merged entity. The sale is yet another example of how global digital start-ups have struggled to achieve dominance in China when faced with local competitors such as Alibaba in online markets, Baidu in search engines and Tencent in social networking.
This is in sharp contrast to what has happened in India. Even the recent consolidation in online retail is often suspected to be akin to fattening the goose before an eventual sale. It is tempting to cast Indian online entrepreneurs in an inferior light, but it must be understood that China continues to maintain tight control over foreign presence in the digital space.
One last point. Deal valuation is based on the brand, customer base and data—all intangible assets. That is what really matters in the digital world.