EXPERTS ADVISORY

Uber is selling its China operation to competitor Didi Chuxing, ending the ride-hailing company’s quest to conquer one of the world’s largest markets. Experts at the University of Michigan can discuss the merger:

Puneet Manchanda is a professor of marketing at the Ross School of Business. His areas of expertise include business in emerging markets, strategy and marketing issues.

“The success of a business in China depends on multiple factors. Just producing a strong product at a good price is not enough,” he said. “Firms need to manage the entire ecosystem—the political and regulatory environment, the various forms of competition, the Chinese consumer, the Chinese labor pool and the overall social-cultural milieu. This often loads the dice against non-Chinese firms.

“Interestingly, while this deal increases a firm’s (Didi) market power in China considerably, the fact that a global firm (Uber) loses market power worldwide is good for the consumer. As Chinese firms expand out of China, competition will grow and market power is likely to be less concentrated, leading to consumers being better off in the long term.”

Contact: 734-936-2445, pmanchan@umich.edu

Len Middleton is an adjunct professor of strategy and entrepreneurship at the Ross School of Business. His research focuses on corporate strategy, private equity, development and funding of high-tech startup companies.

“It’s a good strategy for both companies,” he said. “Uber doesn’t waste money and energy in the Chinese market. Didi is making a friend with a big competitor. It is always better to make friends than enemies. The Chinese market is very hard for foreign startups. Making local connections is one of the most important factors in order to be successful in China.”

Contact: lenm@umich.edu

Erik Gordon is a clinical assistant professor at the Ross School of Business who focuses on entrepreneurship and technology commercialization.

“If Uber couldn’t do better than it did, Western companies should be wary of competing against local Chinese companies that have powerful backers,” he said. “Uber invested billions of dollars and every effort to win over government officials in the Chinese style. It wisely decided that it could not win a battle of attrition against a local favorite. I predict that Didi ends up acquiring Uber or Lyft and taking the No. 1 position worldwide.”

Contact: 734-764-5274, rmegordo@umich.edu