Didi Chuxing - Making Headway in the Global Ridesharing Market
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Case Code: BSTR557 Case Length: 16 Pages Period: 2013-2017 Pub Date: 2018 Teaching Note: Available |
Price: Rs.400 Organization: Didi Chuxing Industry: Transportation Countries: China Themes: Corporate Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Enter Uber
Uber started its operations in China in 2013. At the time, on-demand mobility services were at a nascent stage with Didi Dache and Kuaidi Dache having launched their operations just then. Beijing was the 100th city in which Uber had launched its services. Uber customized itself to suit the needs of the Chinese, and also joined the local player Baidu to use its maps and develop software for locating drivers...
The Merger
In February 2015, in a surprise move, Didi Daiche and Kauidi Daiche announced that they were merging, forming Didi Kauidi. The merger resulted in the largest ride-sharing group in China, with the combined entity being valued at US$ 6 billion. It resulted in consolidation in the industry and also brought in a lot of synergies. Besides, the merger brought the two e-commerce giants Tencent and Alibaba together. "The fierce competition between Kuaidi and Didi is not sustainable. The merger is the result of strong desires from all the investors of both companies," Didi Kuaidi's CEO, Dexter Chauanwei Lu, said....
Exit Uber
After the merger, the competition between Uber and Didi intensified. With the merger, Didi had become the largest operator in China with a market share of 85%. However, it continued to face tough competition from Uber in China, which was investing millions of dollars in subsidies to attract passengers and drivers. Usually, Uber took a 25% cut in what the passenger paid, and gave the remaining amount to the drivers. But in China, Uber paid many times the passenger fare to the drivers, in the process, losing money on every ride. Didi, on the other hand, started spending less on subsidies, and concentrating on the markets where competitors were not giving much of a subsidy...
International Expansion of Didi
For Didi, China was the biggest market. After the Uber acquisition, it had a share of over 95% in the market space in offering on-demand mobility services. But with its sights set firmly on going international, it was concentrating on other markets too, even before acquiring Uber's Chinese operations....
Road Ahead
Though Didi appeared to have shifted its focus toward global markets, its China ambitions remained intact. The company was of the view that it had a long way to go in China. By the year 2017, it was serving 31 per cent of the total urban population in the country. Analysts said that the newly introduced regulations could have slowed down Didi's expansion in China. The new regulations mandated that the taxi drivers and taxis should be registered as commercial vehicles, which would put a cap on the life time of the vehicles, after which the vehicles would have to be replaced by the owners....
Outlook
According to a report published by the Information Research Department of State Information Center, China, the sharing economy in China was expected to be worth around US$ 680 billion in 2017, and was expected to grow at 40% per annum over the next few years. More than 50 businesses were functioning based on the sharing economy business models, serving around 500 million people in China . The sharing economy businesses were expected to grow by 40% in between 2016 and 2020,...
Exhibits
Exhibit 1:Snapshot of Global Operations of Didi
Exhibit 2: Market Share Taxi-Hailing Apps in China
Exhibit 3: Didi's Complete Profile
Exhibit 4: Operational Structure of Didi
Exhibit 5: Market Share Taxi-Hailing Apps in China
Exhibit 6: Didi and Uber Comparative Figures in China
Exhibit 7: Total Financing Structure of Didi
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