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Opinion

Why Uber's China loss Will Actually Be a Long-Run Victory for the Company

By Arun Sundararajan

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...retreating from the China battle puts the company in a better position to win the global ride-sharing war, and frees up managerial attention for the bigger challenges that lie ahead.

At first glance, the acquisition of Uber’s China operations by Didi Chuxing may seem to deal a significant blow to Uber -- a scaling-back of the company’s bold global ambitions. But a closer look at the agreement suggests that the outcome is actually a victory for Uber’s investors and a lesson for tech entrepreneurs, about balancing aggressive ambition with pragmatic pivoting.

In fact, for Uber, retreating from the China battle puts the company in a better position to win the global ride-sharing war, and frees up managerial attention for the bigger challenges that lie ahead.

Ostensibly, the deal announcement seems like an about-face for the U.S.-based ride-sharing behemoth that has spent billions in pursuit of market share in China. CEO Travis Kalanick, who spent over 70 days there in 2015, has frequently hailed the country’s importance, going as far as indicating in a September email message to investors that, “China represents one of the largest untapped opportunities for Uber, potentially larger than the U.S.” So, ceding the market to Didi might be mistakenly seen as Uber’s first major capitulation.

Read the full article as published in Entrepreneur

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Arun Sundararajan is a Professor of Information, Operations and Management Sciences, Robert L. & Dale Atkins Rosen Faculty Fellow, and Doctoral Coordinator of IOMS-Information Systems.