DiDi Chuxing: The Chinese Ride-Sharing Giant

Ride-sharing and ride-hailing services are becoming increasingly popular among commuters. It’s estimated that the number of ride-sharing users will grow at a compounded annual growth rate of 16.6% by 2026. Some of the biggest names in this industry include Uber and Lyft. But there is a growing list of other names that are trying to gain a foothold into the global market. Among them is China’s Didi Chuxing. This article looks at a brief history of the company including its financial backers, key mergers, management, as well as its financial prospects for the future.

Didi Chuxing: An Overview

Didi Chuxing is a mobile transportation company headquartered in Beijing. Known simply as Didi, it is now one of the world’s largest ride-hailing companies, serving more than 493 million users across Asia-Pacific, Africa, and Latin America, Central Asia, and Russia.

Didi was founded in 2012. Founder Cheng Wei, who named the company Didi Dache, intended it to be a smartphone app for people who wanted to immediately hail cabs. Since then, it’s expanded beyond taxis to offer a broad range of services for travelers including private cars, car rentals, buses, and chauffeurs, as well as delivery services, and bike-sharing in its quest to move beyond traditional cab services. The company uses new technologies such as artificial intelligence (AI) to more efficiently deploy its resources.

Since its creation, the company has raised more than $23.2 billion in 26 rounds of funding as of April 2021. The company has also made strategic investments in other global companies such as Lyft, Bolt, and Grab.

Didi Was Built on Mergers

Didi Chuxing has undergone a series of key mergers and acquisitions (M&A) since 2012—most notably with key rivals who vied for market share in China.

Reuters reported that Didi was locked in a price war with rival Kuaidi Dache, resulting in major losses for both companies. While Didi claimed about 55% of the Chinese market, Kuaidi controlled much of the remaining 45%. The 2015 merger resulted in one of the largest ride-sharing apps, with the newly-formed combined company valued at about $6 billion at the time.

Didi also competed aggressively against international companies that tried to corner the Chinese market including Uber China. After Uber lost an estimated $2 billion in a market share battle, Uber brokered a truce with Didi Chuxing. Uber China sold its business to Didi and became a minority investor. Didi invested $1 billion in Uber as part of the deal.

Didi’s Financial Backers

Didi has raised significant amounts of capital to expand. Some of the larger financings include a $700 million Series D round led by Singapore’s sovereign wealth fund (SWF) Temasek Holdings—which has also made investments in companies such as Airbnb, Jet, and Snapdeal. China Life Insurance, which has made multiple investments in Didi, also led a $300 million debt financing round. The company also received $4.5 billion involving undisclosed investors, according to Crunchbase.

The company’s lead investors include those that have participated in corporate and private equity rounds. Among them are Toyota, SoftBank, and Booking Holdings, an online travel and reservation service company.

Didi’s Management Ranks

The management team behind Didi’s success boasts alums from Goldman Sachs, Alibaba Holding Limited, and other major enterprises.

Cheng Wei, Didi’s co-founder and chief executive officer (CEO), has extensive technology experience. After graduating from Beijing University of Chemical Technology, Wei held several jobs before joining Chinese e-commerce giant Alibaba. Over eight years, he worked his way up to become vice president for Alibaba’s online payment service, Alipay. 

Jean Liu is the company’s president and has been pivotal to Didi’s rapid growth. Liu, also known as Liu Qing, received an undergraduate degree in computer science at Peking University and a master’s degree in computer science at Harvard University. After working for Goldman Sachs for 12 years and becoming a managing director in Asia for the investment bank, she left for Didi. She rose rapidly, becoming the chief operating officer (COO) by 2014 and then president. She also oversaw Apple’s $1 billion investment in Didi.

Financial Losses

Because Didi is a privately-held company, numbers are scarce about its financial performance. Some reports show that the company is struggling. Many of the losses come from driver payments and subsidizing trips for a total of $330 million. Such losses were not enough to curtail the atmospheric growth of the ride-hailing group.

According to a report from Tech Crunch, Chinese news outlets reported losses of about $1.6 billion in 2018. And that trend goes back to its earlier days. And prior to the merger that ultimately became Didi Chuxing, both Didi and Kuaidi companies posted combined operating losses of $571 million in the first five months of 2015. 

What Does the Future Hold?

Didi Chuxing has almost 12,000 employees around the world and dominates the Chinese ride-sharing market. Since renaming itself as Didi Chuxing in September of 2015, the company has partnered with other ride-sharing companies worldwide in an apparent quest to battle Uber for global market share. Didi has invested $100 million in Lyft, Uber’s major domestic rival, forming a partnership to share technologies and marketing expertise. In January of 2018, Didi took control of Brazilian ride-hailing service 99.

Although the company was rumored to enter into talks of an initial public offering (IPO) in late 2018, it continues to operate as a private company. There is no indication as to when the company may decide to go public.