EMAIL DETAILS

Chinese car-hailing app Didi Chuxing restructures core business

https://www.ft.com/content/8cf56960-f4e5-11e6-8758-6876151821a6

Chinese car-hailing app Didi Chuxing restructures core business

Didi Chuxing, China’s dominant ride-hailing platform, is overhauling its
core business to fight off new competitors in the ride-sharing market after
winning </content/80125fd4-57a9-11e6-9f70-badea1b336d4> a long war against
rival Uber.

The company is planning to set up a division that will include the Uber
China operations </content/e7097c4a-2209-3138-9c71-a7f46e7072fb> it
acquired last year as well as other taxi-booking and ride-sharing services,
and will form a “premier mobility” division for high-end services, Didi
announced on Friday.

“The company restructure shows that Didi
<https://www.ft.com/topics/organisations/Didi_Chuxing> is paying more
attention to its premium car-hailing service,” said Zhang Xu, research
director at Analysys, a consultancy.

Didi was forced to rethink its business model and cut a majority
</content/dee63006-ded3-11e6-9d7c-be108f1c1dce> of its workforce in its
largest markets after Shanghai and Beijing introduced new regulations
</content/ac21babe-91f8-11e6-a72e-b428cb934b78> limiting car-sharing
services to local drivers.

“The policy tightening has led to a huge fall in the number of low-end
*‘kuaiche’* rides available, and Didi has already lost its price advantage
in that market,” said Bao Jun, a transport industry specialist.

*Kuaiche*, which are the cheapest rides available on the ride-hailing
platform, helped Didi obtain market dominance through their mass-market
appeal in undercutting taxis. But a shortage of drivers in big cities has
threatened its dominance with *kuaiche* rides sometimes costing more than
taxis.

Meituan-Dianping, China’s largest food app, joined the ride-hailing arena
this week after quietly rolling out
</content/e8e37194-f41e-11e6-8758-6876151821a6> ride-hailing services
through its food-delivery app in the port city of Nanjing, where
regulations restricting non-local drivers and cars do not apply.

“After the tightening policy, the focus of competition is over who can
provide a better user experience,” said Mr Zhang.

Didi’s “premier mobility” services let users hail luxury cars, as well as
book a chauffeur who can ride over on an electric scooter, fold the scooter
up into the boot of the user’s car and drive them to their destination.
The “premier” section is also seeking direct partnerships with other
companies to supply their fleet.

“High-end cars are a more profitable market without a doubt. But in this
area, Didi faces many competitors,” Mr Bao added.

In addition to premier services, Didi has created a new division to
co-ordinate public transport partnerships with city governments. The
company’s decision to branch into different forms of transport comes as
numerous start-ups in China’s largest cities have begun offering sharing
services for electric scooters and new energy vehicles.

Didi has already held small trials in Beijing and Shanghai for its own bus
service, which could be booked through the app. The public transport
division will focus on working with transport authorities, and use Didi’s
data analytics to optimise existing bus routes.


Eric D. Schwerin
eschwerin@rosemontseneca.com

Sent from my iPhon