Uber has pulled the plug on its Chinese operation after two years of fierce competition with rival Didi Chuxing. But its competitor will now become a partner, investing a billion in the US company. As part of the deal, Didi will buy Uber’s brand, business and data in the country.

The deal also increases the likelihood of an Uber IPO now that the huge drag of Chinese losses has been released.

According to Travis Kalanick, CEO and Co-Founder, “Uber China — in just two years — has exceeded even my wildest dreams. We’ve grown super fast and are now doing more than 150 million trips a month. This is no small feat given that most US technology companies struggle to crack the code there. That’s why I’m so proud of what our amazing China team has accomplished.

However, he admitted that as an entrepreneur, he had to face to facts. “Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.

Says Kalanick, “I have no doubt that Uber China and Didi Chuxing will be stronger together. That’s why I’m so excited about our future, both in China — a country which has been incredibly open to innovation in our industry — and the rest of the world, where ride sharing is increasingly becoming a credible alternative to car ownership.

Credible reports suggest Uber has already lost $US2 billion in China,offsetting much of the successes of the US and Canadian operations.

If anything, the outlook for the ride sharing business was even more problematic in China after the government announced a set of regulations around pricing that were universally considered hostile to Uber’s business model. However, that announcement came in recent days and is unlikely to have affected the timing of this deal.

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