The largest Chinese ride sharing company Didi Chuxing is reportedly considering a USD 6 billion investment backed by SoftBank Group. Bloomberg reports that this would be the single largest round for a Chinese tech startup however, the round’s size could dilute other existing shareholders. As a result, Apple and Tencent could join the investment round in order to avoid diluting their stakes.

Didi Chuxing reached a valuation of USD 34 billion after an investment of USD 120 million by Foxconn last year. SoftBank is already an investor in Didi Chuxing along with Alibaba, Apple, China Life, Foxconn and many others. SoftBank also has investments in Ola and Grab as well.

While Didi cleared the competition from its biggest rival Uber by acquiring its China business, another local rival Ucar is emerging as a strong player. To top that up, Didi is facing hurdles in some key Chinese cities like Beijing and Shanghai because of the regulations limiting its pool of drivers.

If the investment goes through, it is likely that the funds will go towards picking up a fight against Google and Uber for driverless cars. Didi recently opened an artificial intelligence lab in Silicon Valley after attracting talent from its rivals in the self-driving race.

Last year, Didi Chuxing President Jean Liu expressed the intent to take the brand global. There is a lower probability of the resources being used in that direction because with so many stakeholders onboard, it won’t come without going against the interests of some of them.

Source: Bloomberg

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Ever since the China business of Uber was acquired by Didi, something of this sort was expected. Moving ahead with the process, Didi has now separated the Uber in China from Uber global app. This means if you are an international traveller in China, you are going to face issues using the service now.

As it was revealed by some users in a reddit discussion, the app continues to look similar to previous version however, users need to create a new account. That works very well for a Chinese resident but a new account requires a Chinese mobile phone number and a Chinese payment method like Alipay or Baidu Wallet. This would pose a challenge for international travellers as they will not be able to use Uber like they could in the past.

Didi offers its own app in Mandarin only and it has similar requirements. While Uber offered an option for international travellers until now, it wasn’t exactly very easy to use either. This is because similar to many developing markets, the drivers rely less on GPS data and have a tendency to call the rider directly for directions. So you need to know basic Mandarin to call a cab in the country.

With Uber being less tourist friendly now, Didi is working to improve its own app and plans to support multiple languages (and probably add international payment options). Didi recently expressed interest in stepping outside the country borders and making its own product ready for the global market could be a part of the plan. The details on this potential expansion are slim but it is tough to follow without alienating some of the allies.

Source: TechCrunch | Reddit

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At the Vanity Fair’s Next Establishment Summit conference in San Francisco, Didi Chuxing president Jean Liu said that the cab hailing company is definitely going global. She didn’t share much on how it will be achieved and how the brand will go on about it. Didi is already a investor in most of the Uber rivals all over the world and it will be interesting to see what else the Chinese ride hailing giant has up its sleeves.

Along with the investments, Didi also announced multi company partnerships with the local players that go against Uber. Entering markets like India or Singapore will be awkward to say the least. Didi is an investor in Ola and the Indian cab hailing company is a part of Didi’s multi brand alliance. On top of that, Uber is a strong rival to Ola in India and the fact that Uber has a seat on Didi’s board would complicate things.

US is another market that Didi might consider but even if that is part of the plan, it could be much lower down the list. Didi being an investor in Lyft and of course Uber will create similar problems. In European countries, Didi will have to deal with Uber directly and some of the local rivals. Didi can probably look at some markets that are new even for Uber but they won’t come without their own set of fresh challenges, and for a brand not acquainted to the market, it can be a steep climb.

It is worth mentioning that Didi might face regulatory issues in some parts of China if the proposed regulations come into effect. While Didi has certainly made good progress in a short amount of time, the optimistic global plans will not be easy to follow. The plan could possibly include some acquisitions and bigger partnerships, who knows?

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Everyone was wondering how the market outside of China will play out after the recent association between Uber China and Didi Chuxing. Well, we have the answer now. According to a recent news report by Bloomberg, Didi Chuxing and SoftBank Group are leading a new round of funding in ride-sharing service Grab. It also reveals that the deal could exceed  USD 600 million and the round may close this week.

The deal would push up the total investment in Grab past a billion USD. Grab CEO Anthony Tan was quick to comment on the merger of Uber China with Didi Chuxing and told his staff that this deal is a proof that local competition can beat the global ride sharing giant. He said, “With the deal in China, we expect Uber to turn more attention and divert resources to our region, but we have seen that when the local champion stays true to their beliefs and strengths, they can prevail. We see this happening in China, and it will be the same here. They’ve lost once, and we will make them lose again.”

The investment will fuel Grab to deal with the potential attack that is coming from Uber with Chinese market going out of the equation. It also clarifies that the association between Uber China and Didi Chuxing doesn’t cross the borders and the fight is far from over in other parts of the world. Some sources have also indicated that Uber plans to move their experts from China to other key markets. While the dust seems to have settled in China, it might just get fierce in other parts as Didi fuels the Uber rivals. Your move Uber.

Source: Bloomberg

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A news report by Bloomberg suggests that an association between Uber’s China business and its prime rival Didi could indeed be in pipeline. The two may reach a truce instead of fighting a war, especially with the recent regulations by Chinese government taking away some freedom. The news came out few weeks back but was denied by the ride sharing companies saying that nothing like that was on cards. Now however, it seems that the cab hailing war in China might come to an end afterall.

The news comes from both Bloomberg and Wall Street Journal with sources claiming that the deal has been agreed upon. Didi Chuxing will gobble up Uber China and the deal is valued at around USD 35 billion. Both the companies have raised huge capital for investing in China and have been rapidly expanding. Uber China investors will receive a 20 percent stake in Didi according to Bloomberg’s report. The timing couldn’t have been better as the Chinese government’s new regulations shift the cab hailing companies from grey to white while putting some control on their expansion practices.

While Didi was late to look at the market when compared to Uber China, it has built a huge presence across 400 cities in China. Uber sits at less than a quarter of that. Didi Chuxing has associated with various ride hailing companies all over the world to support each other and has also invested in many of them. Didi Chuxing itself was born out of association between Didi Dache and Kuaidi Dache to create what it is today and the association with Uber will scale it up even further while eliminating the friction from the market.

Uber is looking at an IPO soon and this move could put it at the right track towards being a public company. China was a huge money drainer for the brand as Uber was losing over a billion USD per year in China while targeting rapid expansion.

This could change things for the passengers and drivers in China though. As there won’t be any stiff competition to fight off, Didi will eventually be able to cut down the incentives a little faster than it would have otherwise.

With the news now confirmed and China out of the equation, Uber might turn aggressive in India and Southeast Asia. Travis will be a part of Didi’s board taking the front row seat in the game of ride sharing.

Source: Bloomberg

Update (August 8, 2016; 15:00 IST): Included Facebook post by Travis Kalanick confirming the association.

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Uber and Didi have been actively operating in China, expanding their footprint, but they have been in a grey area. The Chinese government recently released a set of regulations which legalise the ride hailing companies in the region. Millions of dollars have been invested in this space and China offers one of the biggest opportunities for the brand. Didi Chuxing is even bigger yet the scale of market means that both continue to handle high volumes.

The regulations that have been introduced will come into effect from November 1. There are some requirements like the drivers having at least three years of driving experience, no criminal record, licenced by local taxi authority and they are pretty straightforward and in general, much relaxed as compared to the draft that was released last year. According to that draft, private car owners will have to get into a full time employment contract with the company and their vehicles will be decommissioned after eight years of service, just like cabs. However, with the new regulations, it only requires the vehicle to be less than eight year old. The Chinese government has been supported initiatives in transportation space and giving some room to the ride hailing companies is also a step in the same direction.

However, the Chinese government has also asked the ride hailing companies to not have “unfair or illegal pricing behaviour that disrupts market orders, or damages state interests or other operators’ legal right”. In short, no more subsidised prices. They are allowed to adjust prices depending on the market but local authorities will have the right to give out “government guidance price”.

In relatively newer markets, expansion is a money burning game. The drivers have to be lured by high payouts and passengers by super cheap prices. Uber loses over a billion USD per year in China as they pay huge subsidies directly to the drivers. This has helped them motivate new users to try out the service and would have continued to do so. Of course companies are slowly cutting down on these incentives as the markets mature, taking them away would put Uber at a disadvantage when compared to its local rival Didi.

Uber operates in around 60 cities in China and plans to reach 100 by the end of this year. Didi on the other hand is present across 400 cities. As Uber will try to expand to new geographies, it will have to compete against an already established user base of Didi without the option of incentivising them to try out Uber.

This would also reduce the number of part time drivers as the driver incentives will go down. Still it looks pretty positive as the government has tried to find the middle ground keeping the traditional cab industry in mind. The cab hailing companies still have the flexibility on price unlike in some parts of India where regulators asked Uber and Ola to operate only at the government issued prices. Both Uber and Didi Chuxing have issued statements welcoming the new rules.

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Soon after the announcement of a huge investment round by the ride hailing giant Uber, Didi announced that they are looking at a round of investment that will top Uber’s recent investment. Apple recently invested USD 1 billion in the Chinese ride hailing company to strengthen its position in China and dig deeper into the automobile space. It could also be a great way for Apple to give push to its payment services. Now news reports suggest that Didi Chuxing has received another USD 605 million investment from China Life Insurance to further fuel the battle with Uber.

China Life is a 70 percent state owned company and is the largest life insurer in China. It is ranked at 94 in the Fortune 2015 Global 500 company list. The investment includes equity of USD 300 million and long term borrowing commitment of USD 305 million according to a statement. The statement also highlights that the two parties will also collaborate on investment opportunities in mobile transportation in China and beyond. This could mean that the two companies will be looking at supporting Didi’s international anti-Uber partners like Ola, Grab and Lyft.

However, China Life is also an investor in Uber and that too in the China operations of Uber. China Life isn’t the only investor placing bets on both the major players in China. Hillhouse Capital Group invested in Didi in the early days and is also an investor in the global operations of Uber. Tiger Global Management is another such investor. Tiger Global is not only playing both sides in the Didi and Uber episode but is also a major investor in GrabTaxi and Ola Cabs. The news of investment in Uber by Tiger Global wasn’t received well by other investors in Ola as one investor playing both sides in the battle puts other investors at a disadvantage.

It seems that with the potential ride hailing app companies have, investors are ignoring the unwritten rule of venture capital. No matter how things play out, they will be on the winning side, one way or the other.

Expect more investment news to come from Didi as the brand tries to top the USD 5 billion round raised by Uber. How this will play out in the long run is anybody’s guess.

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The world hasn’t stopped raving about Uber’s big money flow of $3.5 billion from Saudi Arabia Public Investment Fund and along comes Didi’s investment news of upping the last raised fund by Apple. The Chinese ride-hailing company didn’t even wait a day for the news to go stale when its President Jean Liu announced that Didi plans to raise a bigger amount whose numbers she didn’t confirm.

She announced onstage at the Code Conference, “We have raised probably close to US$5 billion before this round, and Didi is one of the best capitalised private companies. As for that Uber news, I have to say our industry is actually in a very early stage, so the more capital that comes into it the faster it grows. So it benefits everyone of us,”

Tech in Asia sorted a direct quote from the giant saying, “The current round we are raising is actually bigger than the number they just announced. Fundraising can go on forever and ever; but at the end of the day, if you really want to win the market you have to win the hearts of the users. That’s what we are focused on.”

This new capital power gives both the cab hailing titans an extra fuel power to go that super extra mile. The competition is nowhere even close to getting fierce except for Chinese mainland. Didi is the only strong competition that Uber has in far sights but it wants to focus on user acquisitions in homeland country for now. The Code conference brought few pointers that Didi would keep in mind while planning out the big move. The company would be focusing less on the subsidies and would spend more of this massive money to improve Didi’s user experience.

The investments for a year have been paying off Uber because it now has about 30% of market share in China although Didi still has double thoughts about the data that confirms it.( Source: Fortune)

Apart from just these, the logistic possibilities of the companies are endless which would offer more opportunities for these cab hailing supers. Uber is worldwide at this point now but it’s pushing Didi to grab market share of the land they know is theirs. The question is how far?

Source :Tech in Asia

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Didi Chuxing plans to mitigate traffic jams by their new “Great Tidal Strategy” or plainly Tides. According to this big data operational strategy, traffic jams could be a thing of past. If all the vehicles that the cab hailing network could be properly dispatched including private cars, taxis, carpoolers, and more, traffic could cease to exist. Didi Chuxing has resources, cold cash and hell incentives to pull this kind of stint to change the way we will define traffic jams.

The approach is fairly simple. Didi will use previously charted data to hail cabs and spot riders in such a fashion that it would avoid hot congestion spots in real time by promoting ride sharing and routing travellers around existing traffic situations. They can also plan to create predictive models based on the existing data and the previous one to anticipate where congestion of traffic might likely occur and direct their vehicles around the problem to skip the fiasco. The systems at Didi can see drivers’ and riders’ location and can possibly help them avoid existing traffic congestion and also causing new ones. The carpooling mode could be promoted amongst riders to encourage more efficiency and notify drivers of where the high demand spots are.

Tides would help mitigate traffic jams as we know and prevent them in using surge pricing at peak hours. Surge pricing is an inelegant solution to curb demand and supply chain. It is an incentive for more drivers to hit the road for higher rewards and also a discouragement for the riders to avoid high costs. Didi plans to curb surge pricing model by using predictive algorithmic data which is a huge differentiator between Uber and Didi. If Uber wishes to eliminate the competition in mainland China, it would have to reform its surge pricing model or witness Didi have consumer stickiness there.

In simpler words , when Didi consumes all the transportation options in China, Tides is a beautiful product we have in the end that will aim to make traffic jams a history.

Source: TheStack

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