Uber, the world’s largest ride-hailing app announced this week that it is to merge its Chinese operations with those of its biggest rival in the country, Didi Chuxing in a deal worth $35 billion.

Didi Chuxing recently secured a $1bn tranche of inward investment from tech giant, Apple Corporation as part of a $7.3 billion round of finance raising while Uber is the world’s most valuable unicorn – a private company with a valuation of more than $1 billion – with an estimated value of more than $50 billion. Despite the impressive numbers circulating both companies, neither have managed to turn a profit in their respective markets. Uber’s Chinese operation has lost more than $2 billion in the two years it has operated there.

Vivian Wang, Chief Economist at JSW Corporation said, “Common sense dictates that we question these enormous price tags attached to companies that are consistently losing money but it’s worth remembering that, up until last year, Amazon had never made a profit either. There is precedent for these companies to turn things around but we’d advise caution should someone like Uber decide to go public.”

Competition between the two companies has been fierce with both committed to pumping billions into their businesses in a bid to eke out an advantage over the other.

JSW Corporation says it is naturally cautious towards any company which posts consistent losses while simultaneously managing to attract large sums in inward investment. “That doesn’t mean there isn’t value to be found outside the traditional methods of price discovery but we trusted our instincts with companies like GoPro and Twitter and we haven’t regretted doing so,” said Wang.


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