Baidu Inc (ADR) (NASDAQ:BIDU), the biggest search engine of China, has come forward to support the taxi-booking app, Uber Technologies Inc., by purchasing a minority stake in the company. The recent round of funding put the app company at a whopping market valuation of $40 billion dwarfing automobile manufacturers such as Tesla Motors Inc (NASDAQ:TSLA).

Uber has laid down plans to expand in China and the app-booking company is likely to start with 14 cities in the country. The company has received support from Baidu Inc (ADR) (NASDAQ:BIDU) and the search engine company is likely to invest up to $600 million in the car-booking service. The investment will be made in both cash and non-cash assets. As of now, Uber has its presence in Shanghai, Beijing, Tianjin, Guangzhou and southern Shenzhen.

It is an excellent opportunity for Baidu Inc (ADR) (NASDAQ:BIDU) to expand its footprint in the industry considering its rivals including Alibaba Group Holding Ltd (NYSE:BABA) and Tencent Holdings Ltd (HKG:0700) already working in the field.

Alibaba Group Holding Ltd has investments in the largest taxi-booking app in China, Kuaidi Dache, which registered 54.4% business of the taxi-booking market of China at the end of the third quarter. Similarly, Tencent Holdings Ltd (HKG:0700) is backing Didi Dache, which has 44.9% market share at the end of the third quarter.

As per the market experts, this is an excellent opportunity for both the companies and Li Yujie of RHB Research Institute Sdn Hong Kong said,

“Uber needs a local player like Baidu that really understands the Chinese market. Baidu is trying to promote its mobile payment system, Uber would help it gain more traffic and boost its location-based services.”

Baidu Inc (ADR) (NASDAQ:BIDU) is holding an event on December 17 titled “Uber Press Conference” and the company is likely to make further announcement in the event itself.

This article has been written by Prakash Pandey.

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