DIDI CHUXING

Founders: Chéng Wéi (程维)
Key people: Chéng Wéi (Founder and CEO), Liu Qing (柳青) (President)
Number of employees: ~7,000

Didi Chuxing (Chinese: 滴滴出行; pinyin: Dīdī Chūxíng, pronounced [tɨ́tɨ́ ʈʂʰúɕɪ̌ŋ]), formerly Didi Kuaidi (Chinese: 滴滴快的), is a major ride-sharing company, providing transportation services for close to 400 million users across over 400 cities in China. Its headquarters is located in Beijing. It provides services including taxi hailing, private car hailing, Hitch (social ride-sharing), DiDi Chauffeur, DiDi Bus, DiDi Test Drive, DiDi Car Rental and DiDi Enterprise Solutions to users in China via a smartphone application.Formed from the merger of rival firms Didi Dache and Kuaidi Dache (backed by the two largest Chinese Internet companies, Tencent and Alibaba respectively), it was valued (as of June 2016) at approximately US$28 billion. DiDi announced that it acquired Uber’s China unit on August 1, 2016. Following this acquisition, Didi Chuxing is estimated to be worth US$50 billion and it is the only company to have all of China’s three Internet giants—Alibaba, Tencent, and Baidu—as its investors.

Didi Chuxing completed 1.4 billion rides milestone in just 2015 alone, as well as clocking over 200 million rides in December 2016 alone (one month), making it the most dominant ride-sharing company in the world. This far surpassed any other ride-sharing company, including Uber which completed only 1 billion rides in 6 years’ time since its founding in 2009.

History 

Didi Dache (June, 2012 – February, 2015)

In June 2012, Orange Technology (小桔科技) was established and Didi Dache（嘀嘀打车）- meaning “Beep Beep Call a Taxi”- the initial incarnation of Didi Chuxing’s ride-hailing service was launched in September, 2016, as an app for consumers to request taxis for immediate pick up by Cheng Wei. Later, the app allowed consumers to reserve taxis for trips in the next day. In 2013, Didi Dache completed its Series B financing. Series C was completed in 2014. In the same year, Jean Liu (Liu Qing), a former Goldman Sachs Asia managing director, joined the company as its COO. She became president of the company the following year.

Didi Kuaidi (February, 2015 – September, 2015)

Didi Kuaidi is the result of the February 2015 merger between taxi-hailing firms Didi Dache (backed by Chinese Internet giant Tencent Holdings Limited) and Kuaidi Dache, backed by Alibaba Group. A study in December 2013 by Analysis International, cited by Reuters, estimated Didi Dache to hold approximately 55% of the smartphone-based taxi-hailing market (about 150 million Chinese were estimated to use theirs smartphones to hail taxis), with Kuaidi Dache holding nearly all of the rest of the market share. However, a protracted price war in an effort to gain market share had resulted in mounting losses for the two companies, despite Didi Dache and Kuaidi Dache raising US$700 million and US$600 million from private investors, respectively, to sustain their growth in the world’s largest transport market. According to the press release on the 2015 merge, Didi Dache and Kuaidi Dache would operate in parallel with separate management teams.

As of May 2015, Didi Dache was to spend another CNY1 billion (US$161 million) on aggressive promotions and advertising in order to consolidate its dominant position against startups such as Yidao Yongche (Chinese: 易到用车) and Uber (who has Baidu, the third-largest Chinese Internet company, as an investor). This includ ed adding other features alongside its basic taxi-calling function such as the ability to carpool, hire premium cars, hire designated drivers and use a special service for passengers with disabilities. Caixin reported that in June 2015 the company had a market share in car hire service of 80.2%. In July 2015, the company completed a US$2 billion fundraising round, bringing the company’s cash reserves to over US$3.5 billion. This is the world’s largest single fundraising round by any private company, as well as the largest fundraising round for a Chinese mobile internet company. The new investors includ ed Capital International Private Equity Fund and Ping An Ventures, part of Ping An Insurance Group Co of China Ltd. Its existing stakeholders, including Alibaba, Tencent, Temasek Holdings (Private) Ltd and Coatue Management, also participated in this fundraising round. By September 2015, the company had a market share in private cars of 80% and in taxis of 99%.

In 2015, Didi Kuaidi invested in Grabtaxi, a taxi-hailing app in Southeast Asia.

Didi Chuxing (from September, 2015)

In September, 2015, Didi Kuaidi rebranded itself as Didi Chuxing. Since December 2015, DiDi have formed partnership with Grab, Lyft and Ola. The partnership allowed people who use one of these cab-hailing networks at home will be able to use the same apps that they are used to, on their smartphones, to book rides on any of the other three networks. DiDi’s acquisition of Uber’s operation in China might cloud the partnership.

Around the start of 2016, the company was engaged in a fierce price war with American rival Uber, which started operations in China in 2015. The competition with Uber China which operated in 40 Chinese cities led to Uber’s CEO Travis Kalanick to claim the company is losing over US$1 billion annually on its Chinese operations, despite their local unit being valued at around US$8 billion after a recent billion-dollar fundraising round. This was confirmed by Uber’s Chinese officials in an email to Reuters in February 2016.Despite Kalanick claiming that “We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share…”, a spokesman from Didi Chuxing responded in an email to Reuters that Uber’s asser tions were untrue and that “smaller competitors have to bleed subsidies to make up for their insufficient driver and rider network.” The spokesperson further said that Didi Chuxing had passed the break-even mark in over half of the 400 Chinese cities they operate in.

In June, 2016, DiDi closed a USD $4.5 billion fundraising round, with investors including Apple Inc., China Life Insurance Co., and the financial affiliate of online shopping firm Alibaba Group Holding Ltd.This fundraising round is the world’s largest equity share fundraising round by any private company, updating the previous record set by DiDi. In addition, DiDi has secured a $2.5 billion syndicated loan arranged by China Merchants Bank Co. DiDi also raised roughly $300 million in debt from China Life.

On August 1, 2016, it was announced that Didi Chuxing had acquired Uber China. The company is now estimated to be worth US$35 billion. With the deal, Uber acquired 5.89% of the combined company with preferred equity interest which is equal to a 17.7% economic interest in Didi Chuxing. Didi Chuxing will also obtain a minority equity interest in Uber. Under the terms of the deal, Cheng Wei has become a board member of Uber and Travis Kalanick has got a seat on DiDi’s board.

As many as 16 million rides are completed on Didi’s platform on a daily basis in Q2 2016. A total of 1.43 billion rides were completed on DiDi’s platform in 2015.

On March 28, 2017, the Wall Street Journal reported that SoftBank Group Corporation had approached Didi Chuxing Technology Co. about investing $6 billion to help the ride-hailing firm expand in self-driving car technologies,” with the bulk of the money to come from SoftBank’s planned $100 billion Vision Fund.