Inside Didi Chuxing’s plan to become the world’s biggest transport platform
Ride-sharing giant Didi Chuxing is banking on its experience with congested Chinese cities in its expansion to other developing markets
Didi Chuxing, the Chinese ride-hailing company that defeated Uber on home ground, believes it has a secret weapon when it comes to conquering other developing markets: its knowledge of congested cities.
China, the world’s most populous country, has more than 100 cities with more than 1 million residents each. Despite having a lower vehicle ownership rate than the US, there are already more than 300 million vehicles in China, or about as many people as there are in the US.
Those conditions have made China a suitable real-life laboratory for on-demand transport and ride-sharing in its different forms, according to Cheng Wei, the 35-year-old chief executive of Didi.
Last year, the Beijing-based company handled 7.4 billion rides, compared with 4 billion trips for Uber. Many of the lessons gleamed from matching transport needs for China’s mega-cities can be applied to other metropolises in regions like the Americas, which are also home to some of the most congested cities like Mexico City or Sao Paulo.
These developing markets will form the backbone for Didi’s global expansion, with the goal to become the world’s biggest transport platform in 10 years, serving more than 2 billion users, Cheng said at a briefing in Beijing on Tuesday.
The ride-hailing company started services in Mexico, its first footprint in South America amid a global expansion to Hong Kong, Japan and Taiwan.
“We hope the revolutionary ride-sharing services in China can serve as a strong reference across the world,” Cheng said at the event to mark its alliance with 31 auto industry partners. “Ride-sharing is an opportunity for China to change lanes and overtake other countries.”
The need for ride-sharing in the US – where Uber is based – is not as “dire” as in China, according to Cheng. China is home to three of the world’s 10 most congested cities.
To build its global network, Didi has been on an acquisition spree, investing in Grab, Lyft, Ola, 99, Taxify, and Careem, which together serve a combined 80 per cent of the world’s population, according to the company.
The expansion has come amid Uber’s pull-out from Southeast Asia. Grab, in which Didi is an investor, took over Uber’s operations in the region in exchange for a stake in the Singapore-headquartered company.
Brazil will be next on Didi’s expansion road map. Didi now has about 1,000 Portuguese-speaking staff on the ground to “share technologies and experience” after it recently acquired 99, Brazil’s biggest ride-hailing platform, after making an initial investment of US$100 million in the company last year, according to Cheng.
Didi is also working with auto manufacturers to develop vehicles for ride-sharing, though the company has said it has no intentions of becoming an carmaker. Its alliance with carmakers is a step toward sharing expertise on mobility services, after-sales services and exploring smart-driving technologies as well as new models for ride-sharing, according to the company.
Counting Apple, Alibaba Group Holding and Tencent Holdings among its biggest shareholders, Didi has surpassed Uber to become the world’s most valuable start-up. Alibaba is the parent of South China Morning Post.
Didi is also is widely seen to be considering an initial public offering.
“China could play a pivotal role in transforming the existing automotive and transport structure that has been in place for over 100 years,” Cheng said. “The alliance is a gateway for our transport industry to elevate itself from a global leader in scale, to a global leader in innovation.”