As an indirect investor (via Benchmark Capital and Coatue) in both Uber and Didi, it was hard for me not to be happy about the recent announcement that Uber has surrendered to Didi in China in exchange for an equity stake. The battle between Uber and Didi in China has burned billions of dollars and yuan, and investors on both sides were begging the companies to call a truce and stop losing several dollars per ride (over 10 million per day, reportedly) in their hunger for market share. The merger of Uber China with Didi should bring rational capitalism to the giant new Chinese ride-hailing industry, setting it and consumers up for a healthy future.
So, as an investor, I am happy — but as a free-trader and proponent of globalization, I am sad. I was listening to President Obama’s great speech this morning from Singapore in support of the TPP (Trans Pacific Partnership), of which China is not a party, and I was reminded once again of how closed the huge Chinese market is to non-Chinese companies. In industry after industry, countries outside of China have been ripped off or beaten back through a raft of Chinese protectionist regulations and traditions. Yet, Western markets are wide open to Chinese goods and services. It’s simply not fair.
I have some first-hand experience with this in my internet media and commerce businesses. In my interactions with Chinese internet entrepreneurs, I’ve found them to be smart, driven and creative. I also find they are happy to share their experiences and strategies with me and my American companies, which, at first, feels encouraging. Upon further reflection, however, this is probably because they have zero fear of my companies every coming into China and competing with them.
To be clear: I think Trump’s positions on international trade are naive at best and dangerous at worst. However, I do believe the U.S., along with China’s other trading partners, needs to push much harder on the Chinese government to open up their domestic markets to our companies and products. Uber’s capitulation in China is just another brick in the great wall that China has built around its economy to protect it from perceived foreign invaders.