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China’s largest force in the ride-hailing sector, Didi Chuxing, confirmed that it had raised $5.5 billion in new funding from investors after reports of the investment leaked.
This latest round pushes Didi into rarefied company, giving the firm an estimated valuation of about $50 billion and setting up the US’ Uber as its main rival vying for global dominance of the ride-sharing sector.
Didi claims to have roughly 400 million users and operations in about 400 cities in China. It also says it has the capacity to manage 20 million trips on a daily basis.
According to research from Cheetah Lab, Didi had the highest reach among Android smartphone ride-hailing app users in China in fall 2016, at 2.01%. Uber was in second with 0.38% reach, but the figure reflected whatever vestiges of the company remained in operation following its August 2016 announcement to merge its China business with Didi’s, effectively giving up on the market.
Cheetah Lab’s data also indicates that Didi has already escaped the gravitational pull exerted by domestic rivals. YounChe.com’s reach was recorded at just 0.11%, and competitors Dida Pinche and Shenzhou Zhuanche barely even registered among mobile ride-hailing app users in the country.
Didi’s new influx of capital positions it to expand more aggressively into markets outside of China, a move that will be complicated by the fact that Uber—arguably Didi’s main rival for control of international markets—owns about 17.5% of the company.
That showdown is already on the horizon, with Didi making it clear that it plans to move into other countries. “Didi is striving to advance the transformation of transportation and automotive industries through active internationalization plans,” the company said in a statement acknowledging its new funding.
In those efforts, Didi will be forced to square off against a number of other ride-hailing companies now operating in various countries in Asia, among them India’s Ola, Indonesia-headquartered Go-Jek.
Uber has also made strides in many of these markets, although the services have faced resistance in various cities from regulators, just as Uber has in the US. Ola, for instance, was found by Cheetah Lab to hold a slight advantage over Uber in terms of reach among Android users in India in fall 2016.
Playing catch-up with any of these competitors will be tough in the bare-knuckled on-demand transportation sector, but especially because homegrown platforms understand the nuances of their native markets, and have had time to burnish their individual brands.
Back in 2015, Didi famously announced an alliance with US-based Lyft, Ola and GrabTaxi (as Grab was formerly known) that allowed users to book rides on any of the services through any one of the apps. The move was intended to serve as a bulwark against aggressive moves into new markets by Uber.
But the calculus among the companies appears to have changed since then.
In March, Mashable reported that Didi had quietly ended its relationship with Lyft, and that Lyft had done the same with Grab. It’s possible that the other members of the alliance have also withdrawn with little fanfare, with the companies no longer viewing each other as allies, but threats, in their plans for international expansion.
It’s also highly likely that Didi will dedicate at least some of its new funds to autonomous driver technology, an area in which Uber has made its interests plain. Didi said nearly as much in its statement: “Didi is working toward systemic breakthroughs in intelligent driving technologies and smart transportation architecture.”
Or, in plain English, the company has seen the future of its business, and there’s no person behind the wheel.
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