This article was published on Forbes.com on Aug 3, 2017
When Uber ceded to China’s largest ride-hailing platform Didi Chuxing a year ago, it might not have expected to wrestle with this formidable opponent again in so short a timeframe. However, the battle isn’t over yet. “We will definitely compete with Uber globally again,” DiDi’s cofounder and angel investor Wang Gang told Forbes towards the end of last year.
Wang’s vision is coming true. DiDi has extended its influence to five continents, after they announced a strategic partnership on August 1st with Taxify, a fast-growing ridesharing company in Europe and Africa.
“DiDi is clearly making fast moves against Uber in Europe and has its eyes set on Africa too,” says analyst Joe Kempton at research firm Canalys. “Eastern Europe and Africa are the markets where the landscape is still undefined and there is a lot of consumer loyalty to be won.”
Increasing Global Presence
Roughly one week before this collaboration, DiDi made another huge move, this time in Southeast Asia. It teamed with Japan’s SoftBank to inject around $2 billion into its existing partner Grab, Uber’s biggest competitor in the region. “The scale is much larger compared to the previous [investment in Grab],” says Wang Xiaofeng, a senior analyst at research firm Forrester.
DiDi is eyeing up Latin America as well. In January, the company allied itself with Brazil-based taxi on-demand service 99. Aside from these three new deals in 2017, DiDi is also cooperating with Uber’s major U.S. competitor Lyft, global car-rental firm Avis Budget Group, and India’s ride-hailing company Ola.
“DiDi has secured absolute dominance in China,” says Zhang Xu, a senior analyst at internet big data service provider Analysys. “When the domestic market is close to saturation, it’s important for DiDi to go out and seek continuous growth.”
Shifting Corporate Strategy
DiDi’s surge of overseas engagement this year is facilitated by both organizational restructuring and strong funding. It listed global distribution as one of its five key strategies for 2017 and unveiled an international division in February, and went on to raise over $5.5 billion to boost global efforts and self-driving in April, a record for a single tech-industry funding, according to Bloomberg.
To DiDi, developing capabilities at home and abroad are not mutually exclusive. “You can go local at the same time that you go global, which could very well create great synergies,” said a spokesperson for DiDi when Forbescontacted them for this article.
Nevertheless, the rudder has tilted towards the global side, as the representative for DiDi explained: “In order to fulfill our long-term vision, we will put more energy and resources in the international market to explore the frontier technology, innovate new models of business, and seek link-minded partners.”
Outperforming Uber in Asia
Asia is home to DiDi’s global ambitions, where the Chinese company and its partners have already achieved outperforming scores in many aspects vis-à-vis Uber, according to public data. In terms of estimated market value, the sum of DiDi ($50 billion), Grab ($6 billion) and Ola ($3.5 billion) will approach the overall valuation of Uber globally ($70 billion). In any given region, the local players each have larger numbers of operating cities and drivers than Uber.
Some observers attribute this success to DiDi’s collaborative expansion strategy in contrast to Uber’s individual physical entry into regional markets. “Building local partnerships is definitely a faster way than building a local team and everything from a scratch,” says Forrester’s Wang. “The strategy works especially well in Asia, where the market is more fragmented and localized.”
Extending Soft Power
DiDi’s support for partners is not limited to funding, but also in technology and innovation. Consider Grab as an example: the collaboration has led to the introduction of Hitch, a Southeast Asian replica of DiDi’s commuter ride-share system. Grab also initiated mobile payment solution GrabPay to tackle the lack of credit cards in SEA, a concept that is already widely applied in China.
“One thing is for certain,” said the representative of DiDi. “Going global is meaningless if we don’t bring some real value to the local communities and build real friendships with peers, partners and regulators on the ground.”
Playing the Long Game
However, it’s not easy to cater to such a wide set of investments. “The challenge for DiDi now will be ensuring it can juggle all these different markets at once and give priority to those that need it,” says Kempton. “It is likely its expenditure and investment will only need to increase in the future.”
Kempton adds: “Launching a ride-sharing business will only get it so far—DiDi and Uber are both ultimately aiming for a completely autonomous taxi service. It may be that getting to that point first will make competing on the international stage easier.”
Feature Image Credit: Qilai Shen/Bloomberg