Didi said to begin major job cuts as it overhauls ride-hailing business in China after safety backlash
- Didi has faced a regulatory and consumer backlash at home after two women passengers were murdered in 2018
Didi Chuxing will eliminate about 2,000 jobs, kicking off one of the biggest rounds of cutbacks in China’s technology sector, people familiar with the matter said.
Co-founder Cheng Wei announced the cuts, representing 15 percent of its workforce, during an internal meeting on Friday, where he said some businesses will be re-evaluated and cut back if needed, the people said. But the company plans to hire 2,500 workers to staff other areas during 2019, the people said, asking not to be identified talking about a private matter.
After driving Uber Technologies out of China in 2016, Didi looked set to dominate China’s ride-hailing market even as it delved into new services from bike-sharing to payments and overseas markets such as Latin America. Since then it has faced a regulatory and consumer backlash at home after two women passengers were murdered, prompting a shift in focus to safety over growth. The world’s third most valuable start-up also had to contend with fresh competition on its turf from the likes of Meituan Dianping.
Despite the cutbacks, Didi intends to add 2,500 people to focus on areas from its international expansion to safety and product engineering, the people familiar said, citing Cheng’s comments. That means that by the end of 2019, it should have roughly the same Chinese headcount as in 2018 of 13,000 people.
Didi, backed by Apple and SoftBank Group Corp, has weathered a storm of criticism after the two passengers died within the space of months. Users began publicly deleting the app, forcing the company to make an apology and promise to reprioritize safety, while removing some executives. Regulators cracked down on the types of drivers and cars allowed, shrinking the pool of available rides and stoking discontent among passengers over lengthy wait times. The Chinese ride-hailing giant is said to have lost 4 billion yuan (US$590 million) in the first six months of 2018 alone.
Before the current cutbacks, Didi had already mothballed certain expansion plans in favour of continuously rolling out a series of compliance and safety measures. Cheng is said to have told employees last year the company needed to get away from a single-minded focus on growth – a mentality that earned it a US$56 billion valuation, according to CB Insights.
Even if the company replaces all the people it’s letting go in 2019, the sheer scale of the round of lay-offs would be near-unprecedented among a nation of start-ups that till 2018 enjoyed a record boom.
Now, funding is starting to dry up alongside a cooling in the nation’s economy, the world’s second largest. That was exacerbated by trade tensions with the US and regulatory clampdowns – such as the one on Didi – that fomented uncertainty and spooked would-be investors. Chinese venture capital deals in the December quarter were down 25 percent and at their lowest since 2015, according to market research firm Preqin.
