Didi is a vehicle for hire company that has been much talked-about in recent times. For those who are unfamiliar, it is a Chinese company, so it should come as no surprise to learn that it makes most of its money in the Chinese market even though it operates in a number of other countries and regions as well in the ride sharing platform. Unfortunately for it, Didi has come under serious regulatory scrutiny from the Chinese government, with the result that its app has been removed from Chinese app stores from the time being. Western media wouldn’t care much about that under normal circumstances. However, Didi had just had its IPO on the NYSE, meaning that a lot of people have lost a lot of money. Perhaps unsurprisingly, some of those U.S. investors are now suing over said matter. Time will tell what happens from this point forward.
1. The Name Is an Onomatopoeia
It is interesting to note that Didi’s name is an onomatopoeia. The two syllables are meant to evoke two consecutive soundings of a car’s horn. In other words, if someone had to translate Didi’s name, they could do a very good job by just turning it into “Beep Beep.”
2. Had Previous Names
Speaking of which, Didi has seen more than one name change. Currently, its full name is Didi Chuxing Technology Co. However, it has had two previous names, with one being Didi Dache and the other being Didi Kuaidi. Like Didi, these names are pretty much what people would expect from a vehicle for hire company. For instance, Dache can be translated to mean something along the lines of “take a taxi,” while Kuaidi can be translated to mean something along the lines of “fast.”
3. Started Out As an App
Given this name, it should come as no surprise to learn that Didi started out as an app meant for taxi-hailing purposes. Said app was developed by the company Beijing Xiaoju Keji Co. Even now, said company still serves as Didi’s holding company.
4. Founded By Someone Who Used to Work for Alibaba
It isn’t uncommon for people to build up expertise, experience, and other resources by working in the tech industry before striking out to found their own companies. Didi is an excellent example. After all, its founder Cheng Wei was once an employee of Alibaba, who tends to be known because of its e-commerce but is involved with various other tech products and services as well. In any case, said individual worked for a couple of the company’s divisions. One was sales. Meanwhile, the other was Alipay, which is an online payment platform that sees a lot of use in not just China but also throughout the Chinese diaspora.
5. Backed by Tencent
Having said that, Beijing Xiaoju Keiji Co. didn’t wind up being backed by Alibaba. Instead, it winded up being backed by Tencent, which is another one of China’s tech megacorporations. In its case, said company specializes in Internet-related products and services, which cover everything from entertainment to AI. As such, a taxi-hailing app was very much within its field of interest. Nowadays, Tencent is still involved as a partial owner in Didi, though its ownership stake is much smaller than those of some of the other entities involved in Didi.
6. Had a Rival
Alibaba had an interest in taxi-hailing apps as well. In its case, it backed another taxi-hailing app called Kuaidi Dache, which was smaller than Didi Dache but still formidable in its own right. For context, a 2013 study estimated that Didi Dache held about 55 percent of the Chinese market for smartphone-based taxi hailing. Most of the remaining 45 percent was held by Kuaidi Dache, though it is important to note that there were other players involved as well.
7. Merged with Its Rival
Naturally, Didi Dache and Kuaidi Dache engaged in fierce competition, particularly since both of them were backed by tech megacorporations. This makes sense because the Chinese market for their services was booming in those times, not least because of the explosive increase in Chinese smartphone users. Something that was fueled by a trend of Chinese people skipping landlines in preference for going right to smartphones, which has been observed in plenty of other developing countries as well. In any case, Didi Dache and Kuaidi Dache didn’t continue their rivalry indefinitely. Instead, the two merged with one another, thus creating Didi Kuaidi.
8. Became Even More Dominant in Its Chosen Market
The merger provided Didi Kuaidi with an even stronger position from which to claim the Chinese market. However, it also took serious efforts to capitalize on its advantages, as shown by the introduction of various features in the mid 2010s. For example, Didi Kuaidi introduced functions for carpooling as well as premium vehicle hailing. Similarly, it worked to make its app more accessible to people with various disabilities. Thanks to this, the company controlled something like 99 percent of the taxi market share by September of 2015.
9. Decided to Rebrand Upon Achieving Dominance
In the same month, Didi Kuaidi made the decision to rebrand upon achieving dominance in its chosen market. As a result, its name went from being Didi Kuaidi to being Didi Chuxing.
10. Encountered Considerable Hostility from Some Taxi Drivers
Anyone who has ever paid attention to the development of vehicle for hire companies should find it no surprise to learn that Didi encountered considerable hostility from some taxi drivers in China. The exact reasons why this kind of thing happens can be quite complicated. For example, vehicle for hire companies increase the number of options available to consumers, thus driving down what they could expect to earn. Meanwhile, it is also common for vehicle for hire companies to face fewer barriers to entry, which can irk taxi drivers who have to deal with more rules and regulations. Regardless, the reaction was quite fierce in some places. To name an example, local taxi drivers actually managed to get Didi’s offices shut down in the city of Luoyang, which was no small accomplishment.
11. Competed with Uber China
Didi was by no means free from competition from this point forward. To name an example, it engaged in a fair amount of competition with Uber China, which had managed to become a notable name in the Chinese market by 2016 even though it had started up in just 2015. Uber put significant resources into said effort, so much so that its then CEO Travis Kalanick claimed that it was losing $1 billion USD on an annual basis by running Uber China.
12. Bought Out Uber China
Eventually, Didi handled Uber China in a similar way to how it handled Kuaidi Dache. Simply put, it bought out Uber China, which was valued at around $35 billion at the time. Simultaneously, both Didi and Uber acquired an ownership stake in each other, with the result that Uber is still a notable owner of the other vehicle for hire company at this point in time. Having said that, the relative size of its ownership stake has seen some decline over time, which is a product of other investors pouring funds into Didi since then.
13. Also Partially Owned by Softbank
Another major owner of Didi would be Softbank. Those who are curious should know that this is a holding company based out of Minato ward in Tokyo, Japan. Softbank is famous for investing in the tech, energy, and financial sectors, not least because it has more than $100 billion of capital. It is interesting to note that its logo is based on the flag of the Kaientai, which has the distinction of being a naval trading company founded in 1865 by Sakamoto Ryoma. Said individual is famous for being an opponent of the then ruling Tokugawa shogunate. He didn’t live to see its fall in 1868 because he was assassinated by its supporters in 1867. However, Sakamoto Ryoma played a major role in bring about the downfall of the Tokugawa shogunate because he helped to form the Satcho Alliance between the powerful Satsuma and Choshu domains that led the anti-shogunate forces.
14. Faced Some of the Same Teething Issues as Other Vehicle for Hire Companies
Didi faced some of the same teething issues as other vehicle for hire companies. For instance, it received a great deal of bad PR in 2018 because two women were murdered by their drivers in May and August respectively. As a result, Didi moved to cancel the social carpooling service that they had used. Furthermore, it put considerable resources into improving safety standards, as shown by new features such as blocking, en-route audio recording, and a button for getting police assistance.
15. Has Gone International
Most of Didi’s revenues are still made in the Chinese market, which makes sense because it is the dominant player in the lucrative market. However, it has long since gone international. In some cases, this means other Chinese-speaking places such as Hong Kong and Taiwan. Meanwhile, there are also Didi operations in far-flung countries such as Brazil, Chile, Peru, Russia, and South Africa. Barring a truly unexpected outcome from its current troubles, it seems reasonable to speculate that most of Didi’s revenues will continue to come from the Chinese market for the near future even as it works to increase its market shares in other regions.
16. Has Come Under Scrutiny from the Cyberspace Administration of China
Very recently, Didi has come under scrutiny from the Cyberspace Administration of China, which would be the Chinese government’s main Internet regulator. Thanks to this, its app has been removed from Chinese app stores, though its app can still be used by those who have already downloaded it onto their smartphones. The matter is still ongoing, so interested individuals don’t have a very clear picture of what is going on. However, the Cyberspace Administration of China has stated that Didi has run afoul of the rules when it comes to the collection of personal information as well as the use of the collected personal information.
17. Not the Only Chinese Companies Being Scrutinized
It is important to note that Didi isn’t the only Chinese company being scrutinized right now by the Cyberspace Administration of China. Two other examples would be Full Truck Alliance and Kanzhun, which are being covered by the same probe. Once again, it isn’t clear exactly what is going on here. However, the fact that both Full Truck Alliance and Kanzhun are also listed in the United States has caused much speculation. There are some people in the United States who think that they are being targeted because the Chinese government is annoyed at the U.S. government. Meanwhile, there are some people in China who think that they are being targeted because of concerns over their collected information entering the hands of the U.S. government as well as other non-Chinese entities. Whatever the case, an official statement about a potential tightening of the rules for Chinese companies seeking to list their shares outside of the country makes it clear that there is more than one factor at play here.
18. Might Have Been Impacted by the COVID-19 Crisis
Curiously, some parties have speculated that Didi might have been impacted by the COVID-19 crisis in an indirect manner. China brought COVID-19 under control within a relatively short period of time. However, it still saw significant disruptions to everyday life that were much the same as those in other countries, which in turn, caused huge upswings in the use of online products and services. Some parties have speculated that this has made the Chinese government aware of exactly how much personal information is being collected by the Chinese tech megacorporations, which translates to a huge amount of power being gathered by the same.
19. Might Have Been Impacted by Chinese Consumer Sentiment
Similarly, there is speculation that Didi might have been impacted by changes in Chinese consumer sentiment. Essentially, the Chinese people didn’t care all that much about companies collecting their personal information in earlier years. However, as the Chinese population has become accustomed to spending more and more time online, they have become more and more sensitive to this particular issue in much the same manner as their counterparts in other countries. This creates even more incentive for the Chinese government to act to regulate what Chinese tech megacorporations can and cannot do in this regard, particularly since there was a need for regulation to catch up in this previously regulation-light field.
20. Didi Now Being Sued by U.S. Investors
In any case, the uncertainty means that Didi’s shares have tanked. Perhaps unsurprisingly, this means that U.S. investors are now suing the vehicle for hire company over the botched IPO. This is particularly true because there are reports that Didi was warned by the Chinese government to delay its IPO in the United States until a review had been conducted. If this was the case, it was possible that the vehicle for hire company actually violated U.S. rules concerning IPOs. Something that could land it in even more hot water.