Didi's China dominance over Uber offers roadmap for ride-hailing rivals

Tue Aug 2, 2016 4:51am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Heather Somerville

SAN FRANCISCO (Reuters) - China ride-hailing service Didi Chuxing's dominance of Uber Technologies in the China market may provide a playbook for regional rivals to fend off the biggest U.S. ride-hailing company, especially in Southeast Asia and India.

The two companies on Monday confirmed the sale of Uber China to its bigger rival, ending a two-year, money-losing effort to break into one of the world's toughest markets. Uber leaves with around a one-fifth stake in Didi, but will give up control of its China operations.

Didi had a head start and maintained the lead on Uber with a strategy that other rivals may emulate, analysts and investors said.

Didi counts two of the most powerful, best capitalized Chinese Internet companies as backers; has tight connections with local government; made an ally of local taxi drivers and expanded into services such as buses that Uber ignored; and exploited its knowledge of local culture and consumers.

Uber and Didi declined to comment.

Among those closely watching Didi's acquisition is Grab, the dominant Southeast Asia ride-hailing start-up that competes with Uber in countries including Singapore and Vietnam. Grab says it has 95 percent market share in third-party taxi-hailing services, while its private-car business has about half of the Southeast Asian market.

"Our investor and global partner Didi has effectively won the battle for market share dominance in China," Grab CEO Anthony Tan wrote in an Aug. 1 memo to staff seen by Reuters. "We have seen that when the local champion stays true to their beliefs and strengths they can prevail," he wrote.

Grab and Didi formed an alliance with India ride-service start-up Ola and U.S. operator Lyft last year, and the Asian companies operate in what could be the next battlegrounds for Uber, said Jeremy Carlson, principal analyst in autonomous driving and mobility at IHS Markit.   Continued...

 
A taxi driver is reflected in a side mirror as he uses the Didi Chuxing car-hailing application in Beijing, China, September 22, 2015. REUTERS/Jason Lee/File Photo