Didi to begin major job cuts in China after safety scandals

Hitch is one of several ride-sharing services run by Didi and allows drivers to pick up passengers for a fee if they are going in the same direction.

When a second young woman was murdered by a rogue driver just three months later, morale at the Beijing-based start-up nosedived. Co-founder and chief technology officer Bob Zhang even broke down in tears in front of Didi’s safety team at one point, calling for courage in the face of “difficulties the company must get through”.

Didi Chuxing still a ride-hailing giant despite 2018 safety setbacks

Didi did not comment on the account given of the company’s internal meetings and declined to make Cheng and Liu available for interview.

The tragedies marked a turning point for Didi, which up until 2018 had been vaunted as China’s ride-hailing darling, outlasting several smaller competitors, triumphing over arch-rival Kuaidi before beating Uber out of the country.

When the first female passenger was raped and killed in Zhengzhou, in central China, allegedly by an unregistered Didi driver whose body was also later found in a river, the company suddenly found itself encircled by disappointed regulators and an angry public demanding urgent action on safety.

When the second woman was found dead by police in Yueqing city, in China’s eastern Zhejiang province, resulting in the arrest of a Didi driver who confessed to her rape and murder – the angry voices rose to a crescendo.

In a letter posted three days after the second tragedy, Cheng and Liu both apologised, blaming “vanity” and “breathless expansion” as reasons for the underlying safety lapses at Didi. Both vowed to prioritise safety as the most important performance indicator and to abandon scale as a measurement of success at the company.

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Didi, once ranked as the world’s most valuable start-up, was reportedly considering a Hong Kong initial public offering early in 2018 before the plan was thrown off track by the safety scandals. There has been no talk of an IPO in 2019, while the company’s US counterparts Lyft and Uber have rolled out lacklustre IPOs as the business model comes under scrutiny.

Alibaba Group Holding, which owns the South China Morning Post, has a stake in Didi.

Didi has not restarted its Hitch car-pooling service since suspending it in August after the second passenger death. In an effort to regain trust, Didi has also introduced a flurry of safety measures including compulsory in-trip audio recording, upgrades to an in-app emergency mechanism that enables riders to add emergency contacts and share routes with them in real time, and a panic button linked directly to local police stations.

Drivers also need to scan their face throughout the day now for identity checks instead of just once a day previously, before taking ride orders. Didi admitted its night mode facial recognition system failed to engage when the alleged killer logged into the account of his father.

Didi is not the only ride-hailing service to face safety issues though as technology drives personal transport into new territory. US providers Uber and Lyft both strengthened safety measures and driver background checks this year after a female student at the University of South Carolina was kidnapped and murdered in late March. She was found dead after getting into a vehicle that she believed to be her Uber ride.

Safety issues in China run wider than ride-hailing too. The incidence of a crime per 10,000 taxi drivers in the country was 13 times higher than the number for ride-hailing drivers in 2017, according to data from China’s Supreme Court.

Didi has committed itself to improving things though. As the manager of a team of 30 building out new safety functions, Huang Yuanjian said at one point the Didi app was updated almost weekly and he barely left the office before midnight for days on end.

Didi revamps structure to restore public trust

“There were bunk beds and a sofa where some colleagues would just crash, and our office was as packed on weekends as it was during the week,” he said.

The effects of Didi’s fall from grace have also been felt outside the office. One female Didi employee admitted she was so afraid of being ostracised she would not say who she worked for while going on dates.

“Everyone was under enormous pressure, especially when family, friends and former classmates point a finger at your employer, accusing it of being drenched in blood, with its hitch riding service the root of all evils,” said Ye Yun, who handles public communications and liaison with drivers and passengers at Didi. “For a young team with an average age of 27 to 28 years old, probably in their first or second job – most of them hadn’t experienced anything like it before.”

The ride-hailing veteran said he and his staff were routinely abused by the public after the two murders. “Customers would dial in and curse customer service staff using foul language all the time.”

However, according to Ye, the situation has improved, with many people responding positively to Didi’s recent safety improvements.

“Our team has gone from just doing a job to fulfilling a mission,” he said. “Before they chose Didi for the potential of its technology but now they have a collective goal to make the product safer, with efficient, early intervention to stop crimes.”

Didi considers letting users choose their own route

Some Didi customers still remain wary though. Eva Yu, a 26-year-old product manager at a Beijing-based tech company, said the fear was palpable in the first few weeks following the 2018 murders.

“I would double check my dress [for modesty] before leaving home if I knew I would be back late,” she said. “Before I liked to sit up front with the [Didi] driver due to car-sickness, but not any more even though the nausea is great.”

She still credits Didi for lowering the risks of late-night commutes in general. “Didi’s emergence has driven out most of the unlicensed taxis, which are often more risky due to the lack of any regulation,” she said.

Didi is trying to navigate its way out of the crisis through better communication and a deeper understanding of some of the issues thrown up by the impact of new technology on transport. For example, the company has held open debates on controversial issues, such as whether it is right that ride-hailing drivers should ever be trusted to transport young passengers travelling on their own.

“Teenagers themselves belong to a vulnerable group, prone to be harmed. However, at the same time, rejecting their orders under some circumstances might also put them in danger,” said Huang.

“The reason why we now have a public consultation mechanism is to enable people to understand the complications and be part of the discussion,” said Ye, adding that there are also questions about driver safety, for example whether they should be able to refuse drunks who could vomit in their car or even turn violent.

The company has also targeted greater transparency – including its financial performance.

Didi Chuxing enters financial services as it seeks profitability

The ride hailing giant said it has not made a profit in the six years since its founding and recorded a net loss of 4 billion yuan (US$580 million) in the first half of 2018, according to Cheng in an internal letter released about two weeks after the second murder.

“Didi is by no means an evil company, and would never prioritise generating a profit above anything else,” Cheng said. “The fault is all ours, as we let competitiveness get above [our] original mission with rapid growth planting hidden troubles.”

In another statement, the company admitted it only pocketed about 19 per cent of each fare in China on average in the three months ended December 31, while its overall cost per journey was about 21 per cent – meaning the current business model is effectively loss-making

Meanwhile, Didi’s crisis has had lasting effects on its founders. Cheng and Liu, who had both been regular fixtures in the media and on the conference circuit in China – lauded for their Uber-slaying abilities – have both kept much-lower public profiles since the safety crisis, with most comments now focused on industry safety.

“We hope revolutionary ride-sharing services in China can serve as a strong reference across the world,” Cheng had said confidently at an event to mark Didi’s alliance with 31 auto industry partners in April 2018, where Liu shared a stage with chiefs from automotive giants such as FAW, Beijing Auto, BYD and GAC for a panel discussion.

Cheng has now been forced to think more deeply about long-term strategy and how to learn from other companies about safety. The effects on Liu – whose father is Lenovo founder Liu Chuanzhi and who has more of an elite upbringing – have been different, according to a person familiar with both leaders, who asked to remain anonymous commenting on private matters.

“Liu has finally dropped the burden of her past,” the person said. “She has started to follow her heart rather than paying attention to the opinions of others, whether it is praise or criticism.”

Didi’s president recently revealed she has been a single mother of three for the past two years and shared details of her breast cancer fight in 2015 on social media, under a repost of a story about how actress Emilia Clarke, of Game of Thrones fame, recovered from a serious illness in between filming early episodes of the TV drama.

For Ye, change is still under way at Didi.

“Nowadays, people don’t need perfection, but we all need to stay true, whether it is an individual or a company.”