WHAT will success look like in the extremely competitive Chinese ride-hailing market? “There are two versions,” Travis Kalanick, the chief executive and co-founder of Uber, recently told The Economist. “There is the gold medal, and there is the silver medal.”

Over the past several years Uber, an American ride-hailing firm, has lost a fortune competing in China with Didi Chuxing, an inventive local rival, and its forerunners. Mr Kalanick seems to have decided that accepting a slice of gold with a side-dish of crow is better than continuing a bloody battle in hopes of getting silver or bronze. The brash Silicon Valley giant has done what seemed unthinkable just a few weeks ago: surrendered.

On August 1st Uber agreed to hand over its Chinese operations to Didi, in return for a 17.7% stake in the combined company’s equity. Uber, though, will get only 5.9% of the voting rights in the new entity. Investors in Uber China, including Baidu, a big Chinese internet firm, will get a 2.3% stake. Mr Kalanick will serve on Didi’s board, and Cheng Wei, Didi’s boss, will join Uber’s board. The deal is a boon for both companies, but especially so...Continue reading