Apple Invests USD 1 Billion in China’s Leading Ride-Sharing Platform Didi Chuxing

[tweetable]Apple Inc revealed on May 12^th 2016 that it had invested USD 1 billion in Didi Chuxing[/tweetable], China’s leading ride-hailing service, which is fighting to defend its market position in China from the advances of an increasingly ambitious Uber.

Didi Chuxing (formerly Didi Kuaidi) formed in February 2015 following a merger between ride-share companies Didi Dache and Kuaidi Dache, which were backed by Chinese tech giants Tencent Holdings Limited and the Alibaba Group respectively. Accordingly, Didi’s services are linked with Tencent’s WeChat and Tencent Map, as well as the Alibaba’s Altrip and the Alipay payment platform, which has over 400 million active users. With the support of these major domestic players and their ubiquitous mobile apps, Didi claims to have captured as much as 87% of the domestic market share.

With its investment in Didi, Apple is hoping to improve its fortunes in the crucial market, following the recent suspension of the American company’s iTunes Movies and iBooks Store services in China on the orders of government regulators in mid-April. On April 20^th, Didi president Jean Liu had met with Apple CEO Tim Cook in their Cupertino, CA headquarters to talk about potential ideas for cooperation and only 22 days later Apple announced its investment.

Following the announcement of the deal on May 12^th, Liu suggested that the partnership would bring about mutual benefits “on product, technology, marketing, and many other levels” (Fortune), whilst Cook emphasised his company’s desire to learn more about particular segments of the Chinese market.

Apple is known to have as much as USD 20 billion in cash set aside for such investments and is looking to encourage more Chinese consumers to use its Apple Pay platform, which was introduced in February this year. Furthermore, Didi’s wealth of data collected from China’s roads will no doubt be considered valuable by Apple, as they potentially look to move into autonomous driving. Didi, on the other hand, is currently in need of capital in order to fund its price war with Uber, as the American company is investing heavily in order to make inroads into the China market.

Significantly, Uber already has a partnership in place with Alipay that has allowed Chinese users to use their Alipay app to hail Uber rides in countries outside of China and use the Chinese platform to pay their fare, whilst Chinese consumers had previously been able to use the Tencent-owned WeChat platform to book Uber cars until last year. Furthermore, Didi already has an agreement in place with Uber’s San Francisco-based rival Lyft that allows Chinese Didi-users to hail Lyft rides in the US, and offers reciprocal Didi services to American Lyft users in China.

Didi’s collaboration with Apple represents another significant partnership between a Chinese and an international tech giant that will further enable Chinese outbound travellers to seamlessly access smartphone-based services overseas. Whilst services offered by Didi and Alipay, for example, are already supported overseas, the involvement of American giant Apple represents a milestone development and can only help to further facilitate the growing trend for online services without borders.

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Sources: Fortune, Bloomberg, Reuters, TechCrunch

Photo: Didi