CATL and Didi said on Jan. 28 that they have signed a partnership to build battery swap stations for commercial fleets to recharge their electric vehicles, in a sign of China’s urgent need to set up a gold standard for EV infrastructure.

Why it matters: The news reflects how major players are rushing to build alliances and expand their presence in the hope of getting a larger say as the Chinese central government is pushing for industry-wide standards to drive EV adoption and reduce the strain on the grid. 

• Xin Guobin, a vice minister of industry and information technology, in June said Beijing will back businesses’ efforts to jointly set standards for battery specifications and swap techniques. 
• Meanwhile, the central government recently set a goal to begin operating large facilities for bi-directional charging in the next two years, which would allow EV batteries to charge during off-peak hours and return surplus energy to the grid when demand is high.

Details: CATL and Didi will set up a joint venture for a fast and large-scale roll-out of a battery-swapping network for ride-hailing services in China, according to a joint announcement, which did not reveal detailed plans for the swap network or the size and structure of the JV. 

• The two companies will also promote the adoption of EVs with swappable batteries while exploring collaboration on other areas such as storage-integrated EV charging facilities, the statement said.
• CATL expects such efforts to enhance its reputation since public infrastructure could help promote it as a purveyor of better quality and longer service life, people close to the company told Caixin.

Context: NIO is for now the dominant player in the field, operating more than 2,300 battery swap stations in China as of December. The EV maker plans to add at least 1,000 more this year and has partnered with big names including Geely, Changan, and Chery. 

• China reported a significant 81% annual increase for its battery swap infrastructure network with a total of 3,567 swap stations as of December, according to data compiled by the Electric Vehicle Charging Infrastructure Promotion Alliance (EVCIPA).

Chinese carmaker Guangzhou Automobile Group (GAC) is strengthening its alliance with ride-hailing platform Didi, investing up to $75 million into the latter’s autonomous driving unit. The move is expected to help GAC enhance its self-driving technological capabilities and sustain its sound growth momentum in the Chinese electric vehicle segment, according to an industry veteran. 

The deal, nearly clinched over three years ago, has recently been revived by the two companies as the impact from Beijing’s extended crackdown on Didi has waned, a person with direct knowledge of the matter told TechNode on Friday. It also comes against the backdrop of Didi’s renewed efforts to solidify its position as China’s biggest ride-hailing service with new incentives, putting smaller rivals under pressure. 

Self-driving push: Autonomous driving has proven to be among the most capital-intensive startup businesses on the current tech landscape, and the extended collaboration with Didi would allow GAC to share its costs and risks of making robocars, said Liu Guanghao, partner at Shanghai-based venture capital firm Befor Capital.

• The first robotaxi jointly developed by GAC and Didi is slated to join Didi’s ride-hailing network for commercial operation in 2025, the companies said earlier this year. GAC’s EV arm, Aion, announced a partnership with Didi back in May 2021 to develop a mass-produced car with Level 4 autonomous capabilities, indicating that the car can pilot itself without a human driver most of the time.
• Didi will also jointly test and operate autonomous vehicles for ride-hailing with OnTime, a mobility platform launched by GAC with partners in 2019, as disclosed by an anonymous source. OnTime, primarily active in the southern Chinese province of Guangdong where its parent company is headquartered, has been testing AVs with Toyota-backed Pony.ai, as well as Nissan-supported WeRide.

EV sales boost: The investment would also help GAC’s core carmaking business achieve sustained growth, especially in the Chinese commercial fleet segment, where its EV brand Aion has established a significant presence over the years, according to Liu. “Carmakers need more sales in order to survive in this highly competitive market,” he said. 

• Aion ranked second in sales among all-electric vehicles for ride-hailing, with approximately 49,000 units sold from January to October 2022, which accounted for 29% of its total sales, according to figures compiled by Shanghai-based consultancy LandRoads (in Chinese). BYD was the top-selling brand in the field, with sales of 35,000 more units during the same period, although this accounted for only 14% of its total volume. 
• GAC told investors last March that shipments of its Aion EVs for ride-hailing services only accounted for 12% of its total sales. The automaker, also a manufacturing partner for Toyota and Honda in China, reported sales of nearly 360,000 Aion EVs from January to September and is hoping to achieve 500,000 units for this year, which could almost double the number it sold in 2022. 

Context: GAC Capital, a wholly-owned subsidiary of the automaker, as well as state-owned Guangzhou Development District Investment Group, will invest the same amount of up to $149 million totally in Didi’s self-driving unit. GAC is set to inject no more than $75 million in the funding round, according to a Friday announcement (in Chinese). 

• OnTime is currently pursuing a public listing on the Hong Kong stock exchange, four years after it was launched by GAC along with a group of investors including Didi and Chinese gaming giant Tencent in mid-2019. It completed roughly 60 million rides last year and has operated in 21 domestic cities in the country’s Greater Bay area as of June. 
• GAC declined to comment when contacted by TechNode on Friday. Didi did not respond to TechNode’s request for comment. 

China’s Didi has recently set new growth targets in the three years to 2025, with new incentives for drivers and riders, in its latest move to recapture lost market share in the country’s ride-hailing sector, LatePost reported Monday. 

Why it matters: The move comes after Didi received a permit in January to resume new user registration and downloads through Chinese app stores for its ride-hailing service, marking an official end to a long-running regulatory crackdown on the company. 

• The development also puts competitors such as Meituan and Alibaba’s Amap under pressure, although industry insiders warn of a bumpy road ahead for Didi in the face of softening market demand due to weakening economic conditions, according to the report. 

Details: Didi recently informed investors that it is aiming for a 45% year-on-year growth in daily orders in 2023 and expects to keep the pace between 10% and 15% over the next two years, individuals familiar with the matter told Chinese media outlet LatePost. 

• This implies that the company is expected to complete more than 29 million rides per day for the full year, rebounding from its lowest point of around 20 million last January, and increasing the number to nearly 40 million by the end of 2025. 
• The annual target for this year is achievable, according to company insiders, with Didi starting from a low base in 2022 when major Chinese cities were repeatedly placed under Covid-19 lockdowns, dealing a blow to the country’s ride-hailing sector.
• The company delivered roughly 28.2 million rides per day on average in the first quarter of 2023, representing a 42% growth from a year ago, and increased its average number of daily rides to 29.4 million in the second quarter, according to its filings. 
• However, Didi’s ambitious objectives for 2024 and 2025 may face significant hurdles amid shrinking demand. By the end of 2022, ride-hailing app users in China totaled 437 million, down around 15.5 million on the total from the year before, according to figures compiled by the China Internet Network Information Center. 
• China’s biggest ride-hailing platform has increased its efforts to subsidize drivers and riders in recent months. A source estimated that the overall amount of subsidies could reach RMB 26.6 billion ($3.6 billion) this year, which would be equivalent to 14.8% of its total revenue at home, surpassing its previous level of 14%. 
• Didi did not respond to TechNode’s request for comment.

Context: Didi has been scaling back its efforts in developing cash-bleeding, emerging new businesses, and refocusing on its core business over the last two years after the Chinese government launched a cybersecurity probe into the company in July 2021. 

• Chengxin Youxuan, Didi’s community group-buy grocery unit, reportedly shut down more than 60% of its service locations shortly after the probe began, only a year after the launch of the service. 
• The company announced the sale of its smart electric vehicle business to Xpeng Motors in August. It had previously launched an all-electric hatchback for ride-hailing with BYD in November 2020.
• Chinese authorities announced a RMB 8.02 billion fine for Didi last July, closing its 18-month crackdown on the mobility giant, which was initiated following its mega public listing in New York in June 2021. 
• Didi had previously set big targets back in 2020. Notably, it had set its sights on overall daily orders surpassing 100 million globally for the next three years, with its four-wheel businesses in China, including ride-hailing and private chauffeurs, intended to account for half of this figure.

READ MORE: Didi app ban ignites race for ride-hailing market share

Top automakers such as Tesla and SAIC (Volkswagen’s partner in China) are slowly rolling towards a restart after weeks of shutdowns of their plants in Shanghai, China’s worst coronavirus outbreak site, in two years. Baidu and self-driving unicorn Pony.ai received permits to offer fully autonomous rides to the Beijing public in late April, the first service of its kind in the country. Domestic battery suppliers saw profits plunge in the first quarter amid rising raw material costs, thanks to a strong demand for electric vehicles (EVs) that utterly outstrips supply.

Shanghai’s Covid outbreak continues to weigh on auto production through May

As Tesla and Volkswagen’s plants in Shanghai slowly resume production, China’s auto industry is struggling to regain the momentum lost during a citywide lockdown that has dealt a significant blow to local businesses over the past two months. Government officials said on May 13 that employees from 95% of the companies on a whitelist of 666 firms prioritized for business resumption are now getting back to work, with automakers and suppliers accounting for more than a third of the total.

China’s biggest automaker SAIC said on May 13 that its joint facilities with Volkswagen and General Motors have restarted production in mid-April in a single shift rather than their usual two shifts, with each plant assembling at least 2,000 vehicles every day. As a result, Tesla shipped out another 4,000 locally-made vehicles to Europe on May 15, four days after its first shipment of 4,767 cars set sail from the Port of Shanghai – the first to do so since the start of the sweeping lockdowns in the city, Chinese media reported.

Supply chain hurdles: Disruption related to labor and supply chains continues to impact auto firms, as many workers can’t return to their workplaces due to inflexible Covid-19 control restrictions in many parts of the city. Tesla’s Shanghai facility reportedly idled most of its production lines for a few days earlier this month due to insufficient supplies, when Aptiv, one of its key parts suppliers, halted shipments of some parts due to new Covid cases at its local plant.

Auto supplier giant Bosch has only experienced a partial recovery with output at around 30%-75% of its pre-pandemic levels at several manufacturing sites, a result of worker shortage and supply chain crunch, its China president Chen Yudong said at a May 11 press conference, while also calling for the easing of Covid restrictions. 

The auto firms that have resumed operations represent only a fraction of the 20,000 parts suppliers, big and small, located in Shanghai and nearby regions, state-owned media outlet China Newsweek reported on May 11, citing several experts.

Weak Q2 guidance: Analysts expect output to slightly recover in May but believe a full recovery is still some way off, as the industry struggles with massive uncertainty caused by Covid lockdowns. Li Auto, which has a production base in the eastern city of Changzhou, was among the automakers hit hard by the lockdown, releasing poor second-quarter revenue guidance on May 11 due to a likely disruption to parts supplies.

And yet, there is still a chance to make up for lost sales in China during the rest of the year if automakers can ramp up car output, given that a growing number of consumers feel safer traveling alone than taking public transport, experts say. In April, Tesla maintained its forecast of at least 50% annual growth for vehicle deliveries this year, despite saying that production volume could take a hit of 8% in the second quarter due to a month-long production halt at its Shanghai facility. The China Passenger Car Association predicted that total passenger vehicle sales may face zero growth to remain at 20.1 million units this year, compared with 2021’s growth rate of 4.4%.

Driverless cars get a push from China’s capital

In a rare step, Beijing authorities announced on April 28 that Baidu and Pony.ai have been authorized to participate in the country’s first pilot program to provide driverless rides to the public in test vehicles. Following the move, Baidu and Pony.ai began by operating 10 and four autonomous vehicles, respectively. The vehicles operate without safety drivers on public roads in an area of 23 square miles in the city’s southeast Yizhuang district. However, each vehicle has a company employee overseeing the journey in a passenger seat, and the firms are not allowed to charge a fee for now.

Chinese self-driving car companies have faced a long and arduous reality check since a wave of early hype and hopes of scaling the technology. Now, regulators are giving the industry a boost by permitting the offering of autonomous services to the public in the country’s capital city – with no human safety driver at the wheel. Concurrently, the race to prove robotaxis are a viable business is intensifying among the top contenders.

AVs undergo reality check: Despite the milestone in Beijing, few of China’s self-driving car startups are making any money, and venture capitalists have been cooling on the companies over the past year, particularly those with little to show commercial prospects. Total investment activity for robotaxi companies fell by 22% annually to $8.4 billion in much of 2021, data compiled by startup data platform PitchBook and obtained by Reuters showed.

Major players are working hard to live up to their promises. WeRide became China’s first self-driving company by testing completely driverless cars in the southern Chinese city of Guangzhou in July 2020. In January of this year, its fleet of 300 autonomous vehicles had logged 10 million kilometers after four years of testing. For Baidu, that number is more than double, and the tech giant said that it provided more than 320,000 autonomous rides in eight domestic cities as of last year, with plans to expand the service to 65 cities by 2025. 

Chinese battery makers’ profits slump amid supply chain issues

Drops in Q1 profit: Despite being buoyed by strong demand for electric vehicles in the country, Chinese battery makers are facing a profit squeeze as the global supply chain continues to buckle under the pressure of rising costs, limited raw materials, and manufacturing disruption. On April 29, CATL reported a year-on-year profit tumble of 41% to RMB 977 million for the three months that ended in March, which came in far below expectations of a RMB 5 billion profit from multiple analysts. It was CATL’s first quarterly decline in net profit since 2020. Meanwhile, profits of the Volkswagen-backed Gotion declined 33%, while Sunwoda, a lesser-known supplier invested in by EV maker Li Auto, also saw a 26% decline in profits despite double-digit revenue growth.

Q2 easing expected: Margins for battery makers have been dragged down by surging raw material costs made worse by the Russia-Ukraine conflict and a global pandemic. An index for battery-grade lithium prices increased by 127% in the first quarter of this year, after a 280% surge in 2021, according to data provider Benchmark Mineral Intelligence. The costs of nickel and cobalt also exploded during the first three months of this year, which hit battery suppliers hard since many of them had negotiated quarterly price terms with automakers for the period up to last December.

Analysts estimate that the supply shortage of raw materials will slightly ease starting in the second quarter of 2022 as battery suppliers step up efforts to secure minerals and expand production capacity. Margins are also expected to improve as most battery makers increased the prices of their products in March by at least 15% for the second quarter, China Securities Journal reported on April 28, citing company sources. This rally in material costs has been reflected in the recent price increases for EVs, ranging from RMB 2,000 to RMB 30,000, although analysts expect that EV sales will maintain their growth momentum this year, boosted by inflated oil prices.

On Wednesday, China’s ride-hailing giant Didi urged US investors to vote yes on delisting its shares from New York. Didi said it can’t pursue a new listing as it faces a cybersecurity review launched last July by Chinese regulators, which still has no clear end in sight. 

Why it matters: The company said in a filing to the US’s Securities and Exchange Commission (SEC) that the completion of Beijing’s cybersecurity review is “a prerequisite” for seeking approval for another listing, which implies a further delay for Didi’s plan to list in Hong Kong instead.

Details: Didi will only be able to complete a cybersecurity review on the condition that the company removes itself from the New York Stock Exchange, according to the filing.

• A settlement with the Chinese regulators is also a must for Didi to resume “normal” operations, including getting its apps back onto domestic app stores and having access to new users, which will benefit shareholders, the company said.
• The Chinese ride-hailing company said it remains unsure whether its rectification program will comply with local laws and when its business can return to normal. A shareholder meeting will be held on May 23 to vote on Didi’s proposed delisting from New York.

Context: Didi initially announced plans to delist from the  US and seek a new Hong Kong listing back in December. But the company had halted the process when it failed to meet the requirements on data security compliance, a March statement confirmed.

• Didi’s losses more than doubled in 2021 to RMB 19.1 billion, while revenue grew by only 22.6% compared to the previous year to RMB 173.8 billion. The company has lost a massive $60 billion in market capitalization 10 months after it made its public debut in New York. 
• The Chinese government launched a cybersecurity investigation into Didi over alleged data security concerns last July, immediately after its $4.4 billion US IPO, and has since neither disclosed any results nor lifted its ban on the company’s services on local app stores.

Nickel prices climbed to an all-time high and could further increase the cost of electric vehicles (EV) and force automakers to cut earnings forecasts. Ride-hailing giant Didi became the latest Chinese tech company to enter consumer EV space; it plans to deliver an entry-level sedan next year. Shares of Nio closed flat in the company’s Hong Kong trading debut. Its listing follows the steps of Xpeng Motors and Li Auto. All hope to attract more investors in China amid growing financial market tensions between China and the US.

Soaring nickel prices cast shadow over Chinese EV players

As the price of nickel jumped to an all-time high since early March, auto industry insiders expressed concerns that an escalating Russia–Ukraine conflict could disrupt supplies of the metal, a key component of EV batteries. While watchers have differing views about the impact on EV adoption, most expect battery prices to remain high and to weigh on the margins of Chinese EV makers for the rest of the year.

Nickel craze: Nickel markets had a wild ride early this month. On March 8, the price of three-month nickel on the London Metal Exchange (LME) more than doubled in a short period, reaching an all-time high of $101,365. The unusual surge prompted LME to halt trading for seven days, set new price limits, and adjust prices. When it reopened, the price dropped back down to around $80,000, yet still about 300% higher than the $20,000 price in late February. 

• China’s nickel producer Tsingshan Holding Group was caught on the wrong side of the market, having built the biggest short position in the metal and betting the price would fall since last year. Tsingshan on March 14 said it reached a deal with its banks to backstop its short position after struggling to pay margin calls on its position during the nickel price surge a week earlier. The company faced an $8 billion paper loss based on nickel’s price of $48,002 on March 14, the Wall Street Journal reported.
• The unprecedented price surge was partly due to concerns from Russia. Western nations imposed sanctions on Russia after it started a war with Ukraine in late February. Russia is the world’s biggest exporter of nickel, prompting buyers to worry that Russian nickel suppliers could be hit by sanctions and transport disruptions.
• The already tight supply of high-purity nickel, fueled by the rising sales of EVs, contributed to the highs in the metal’s price. Nickel is increasingly used in EV batteries as it ensures high-energy density that allows the vehicle to travel further.

Higher cost for EVs: Nickel’s price surge is magnifying the current supply chain woes that have dramatically pushed up automakers’ production costs. The global semiconductor shortage and a boom in the prices of other metals have been the principal factors. 

• The input cost of an EV equipped with a 60 kilowatt hour (kWh) battery pack will increase RMB 9,000 ($1,418) due to nickel’s price growing from about $20,000 early this year to the recent price point of around $50,000, according to estimates from China International Capital Corporation (CICC). Nickel’s price will probably stay high over the short term, partly thanks to low inventories in the country, but the high price may be hard to maintain long-term, CICC wrote in a March 9 report.
• Many experts anticipate an accelerated shift towards lithium phosphate (LFP) batteries from the current mainstream types that use nickel and cobalt as core materials. Nickel-free LFP batteries generally provide a lower driving range and cost less to produce than its counterparts, and yet are now also under price pressure thanks to rising lithium prices, the Wall Street Journal reported.
• Average prices of lithium-ion battery packs are expected to slightly grow to $135 per kWh this year from $132 a year ago, ending nearly a decade of price declines, Bloomberg New Energy Finance estimated in a report published on Nov. 30, 2021.

Impact on EVs: Predictions vary among experts of how nickel’s price hikes could affect the EV supply chain and affordability for customers.

• Morgan Stanley automotive analyst Adam Jonas, one of the leading voices warning investors of massive earnings drops for automakers, expects at least a $1,000 increase this year in the input cost of an average EV in the US. If sanctions against Russia are extended to nickel, it’s “probably time for investors to take auto company earnings forecasts down,” Jonas wrote in a March 7 note.
• Other experts say the overall impact will be limited. The high price of nickel is likely to prove a temporary phenomenon since the metal has long seen high output, Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), told reporters during an online conference on March 8. There are currently few signs of risks to output from other major nickel producers such as Indonesia, Cui added.

Didi’s first consumer EV could hit the roads in 2023

News: China’s red-hot EV market just added another competitor as struggling ride-hailing platform Didi reportedly plans to develop its first consumer car in-house. The compact EV could begin mass delivery as early as next June, according to a local media report on March 15. With an estimated price tag of RMB 150,000 ($23,580), the new model will be an entry-level compact sedan competing with existing offerings such as BYD’s popular Qin EV, the report said. The company is said to have more than 1,700 staff dedicated to the project at its Beijing headquarters. In addition, it is considering a deal to buy Zhijun Auto, a little-known EV manufacturer with a plant in central Jiangxi province.

Insights: The launch of a consumer car might create a new revenue stream for Didi as its core business falters. The project can also cover the high cost of developing autonomous driving technology, an initiative the company has undertaken since 2016. The move would also see the Chinese mobility giant lining itself up to compete with big auto names such as BYD, which is also its manufacturing partner.

Didi had a rocky start in its first attempt to produce an EV with BYD. The D1 was a purpose-built electric crossover for ride-hailing services developed by the two companies. It entered into production in late 2020, six months later than expected, the report said. 

Didi’s ride-hailing volume reportedly declined to 20 million trips per day in January, a 20% plunge from daily figures in the first quarter of 2021. Over the same period, the company’s ride-hailing market share in China has shrunk from nearly 90% to 70% due to Beijing’s ongoing cybersecurity review of the company that began last July. 

Nio shares debut in Hong Kong secondary listing

News: Chinese EV maker Nio made a weak debut in Hong Kong on March 10, closing down 0.69%. The listing took place after a long and winding journey. Already listed on the New York Stock Exchange, Nio has followed in the steps of rivals Xpeng Motors and Li Auto by tapping into Hong Kong’s capital markets. However, Nio did not sell new shares or raise money, and it chose to list by introduction. Xpeng and Li Auto, on the other hand, raised HK$14 billion and HK$11.8 billion, respectively, by selling shares in Hong Kong in the summer of 2021.  

Insights: Nio explained the move by saying it hopes to attract more investors by enabling more listing locations and flexible trading hours. A Singapore listing may be another possibility. The Hong Kong locale does bring the Shanghai-based EV maker closer to mainland investors and provides the automaker insurance against the risk of delisting in the US. But Nio said it had “a sufficient pool of working capital,” according to financial media Caixin (our translation), and did not have an urgent need to raise additional funds. 

Plagued by a shortage of semiconductor chips and batteries, among other supply-chain headaches, Nio has posted lackluster monthly sales volumes for several months. Sales of Nio’s existing three models have been slow. Its first sedan, the ET7, is scheduled for delivery later this month. The company hopes to catch up: It plans to begin delivering its second sedan, the ET5, in September and to launch a sports utility vehicle (SUV), its fourth, by year-end.

Chinese ride-hailing platform Didi wants to lay off 20% of its staff, Chinese media LatePost reported on Monday night. Didi is showing stress signs after Beijing launched a cybersecurity review on the company last July.

Why it matters: Didi is trimming its workforce to reduce operating costs and better cope with intense competition in the ride-hailing market. Other ride-hailers started going after Didi’s market share in China after regulators ordered the removal of Didi’s apps from app stores to review the company for cybersecurity reasons. The review, launched in July, is still ongoing.

Read more: Didi app ban ignites race for ride-hailing market share

Details: Didi will lay off about 20% of its staff across major businesses, including ride-hailing service, package delivery, and bike rental, Chinese media LatePost reported Monday, citing people familiar with the matter. Didi has already begun laying off employees in its corporate research lab in mid-January. 

• Sources told LatePost that the lay-offs will be completed by the end of this month. The company reported an average of 20 million trips per day in January, a 20% decrease from 25 million rides during the first quarter of last year. In addition, Didi’s share of the ride-hailing market fell from nearly 90% to 70%.
• R-Lab, Didi’s corporate research lab set up in 2017 and incubated its food delivery project, will close its operation in China, while overseas staff from the lab are consolidated into its international business group. 
• Didi’s self-driving subsidiary will be excluded from the job cuts, the report said.
• The ride-hailing giant has been unable to add new users. At the same time, it has also experienced a shrinking existing user base since the Chinese government launched a cybersecurity probe into the company in July. Meanwhile, its new businesses have made slow progress, the report said.
• Didi did not respond to a request for comment by TechNode on Tuesday morning.

Context: Didi’s domestic ride-hailing business took a hit due to Beijing’s investigation. The company posted a net loss of RMB 30.4 billion ($4.7 billion) in the third quarter of 2021, compared with a net income of RMB 665 million during the same quarter a year earlier. Its revenue decreased by 13% quarter-on-quarter to RMB 39 billion over the same period.

• Didi’s biggest rival Amap has taken this chance to build up market share, achieving 5 million daily rides on average since last September. The Alibaba-owned map platform is planning to launch a standalone ride-hailing app and establish its own car fleet, moving away from being an aggregation-only platform for third-party drivers, the LatePost report said.

Huawei burrowed further into the auto industry with the launch of the first vehicle with its homegrown operating system. The Chinese government cut purchase subsidies on new energy vehicles (NEVs) by 30% this year, while scrapping ownership limits on foreign automakers’ investments in the auto industry. Chinese electric vehicle (EV) makers Nio, Xpeng, and Li Auto celebrated record annual deliveries of nearly 100,000 cars in 2021. Alibaba’s head of autonomous driving lab quit the company after more than four years. Didi, soon to delist, shows a few signs of approaching break-even with its first post-IPO earnings report.

Huawei intensifies auto plans with launch of first vehicle with ‘seamless’ Harmony

News: Huawei on Dec. 23 unveiled the first EV model equipped with its HarmonyOS operating system with manufacturing partner Seres. Huawei boasts that this in-car software system offers users a seamless experience of smartphone and car features across devices. Priced from RMB 250,000 ($39,063), the Aito M5 sports utility vehicle runs on electricity or fuel and has a 1,242-km driving range, which compares with the 1,080 km offered by Li Auto’s popular plug-in hybrid crossover Li One. Huawei said that it will showcase the vehicle in 180 Huawei shops across 42 cities and deliveries should start around Feb. 20.

Insights: As US chip sanctions crippled its smartphone core business, Huawei is trying to diversify its operations by breaking into the Chinese automobile sector. The Chinese telecommunications giant last April started selling Seres vehicles through its sales network, but they did not sell well. From April through November, Seres achieved sales of only 7,080 SF5 EVs, which were equipped with Huawei powertrain system and in-car software, according to figures published by China Passenger Car Association. Huawei has also partnered with state-owned automakers BAIC and Changan to equip vehicles with its autonomous driving hardware and software. Yet some industry insiders are doubtful that the tech giant will eventually make its own cars.

News link: TechNode 

Beijing sticks to plan to end EV subsidies in 2023

News: Chinese authorities on Dec. 31 unveiled long-awaited details about its national subsidy program for new energy vehicles (NEVs), such as all-electrics and plug-in hybrids. For 2022, beginning Jan. 1, subsidies to EV buyers will be cut 30% compared to 2021. According to a document released by the Ministry of Finance, the grants for EVs delivering driving ranges of at least 400 km (248 miles) will be cut by RMB 5,400 on an annual basis to RMB 18,000 ($2,824). Meanwhile, the subsidies this year for all-electrics with a driving range of 300 km to 400 km will be lowered to RMB 13,000, while those for plug-in hybrids will be cut to RMB 6,800. Beijing also reaffirmed its plan to eliminate subsidies entirely at the end of this year. Subsidies for purchases of new energy vehicles (NEVs) were already trimmed by 10% and 20% during 2020 and 2021, respectively. 

Context: In reaction, several overseas automakers have raised prices for their EVs in China to offset the subsidy cuts. The prices of Tesla’s popular China-made Model 3 and Volkswagen’s ID series EVs have risen by RMB 10,000 and RMB 5,400, respectively. Newer local EV makers are taking a more active approach to reduce the impact of the subsidy cut. Nio on Jan. 1 announced moves to make up the difference between sticker prices and reduced subsidies of its vehicles for customers who had paid a deposit before the end of 2021 and who will get their vehicles delivered by Mar. 31. Cui Dongshu, secretary general of China Passenger Car Association (CPCA), forecasts that the trimmed government incentive program could still give a great boost to the EV adoption in the country, noting that the manufacturing cost of EVs and batteries are falling significantly. Cui estimated China’s NEV sales could more than double to around 6 million vehicles in 2022 from the previous year and therefore maintain leadership in the world EV race.

News link: Reuters 

China lifts restrictions on foreign auto ownership

News: China now allows overseas automakers to operate wholly-owned ventures in the country’s passenger vehicle sector. As of Jan. 1, 2022, foreign firms are no longer limited to 50% ownership in their joint venture auto operations. The law had been in effect since 1994. In addition, foreign automakers can now set up more than two joint ventures that make the same type of vehicles.  The new ownership rules were detailed in a Dec. 27 release from the Ministry of Commerce and the National Development and Reform Commission, China’s top economic planner.

Insights: The move has been perceived as a positive signal that would create a level playing field for domestic and foreign carmakers, Cui Dongshu, secretary-general of the China Passenger Car Association, told state broadcaster CGTN. Nonetheless, Cui said there would be no significant impact on the market from removing the limits since they were expected. German auto major BMW is expected to become the first internal-combustion vehicle maker to take advantage of the new JV rules. It plans to up its stake to 75% from 25% in its JV with Chinese partner Brilliance Automotive by the end of 2022. The Chinese government since 2018 has gradually ramped up efforts to fully liberalize the domestic auto industry, starting by scrapping limits on foreign ownership of EV makers as it aims to be a global leader in the sector. Tesla became the first foreign auto brand to enjoy the relaxed EV regulations when it set up its wholly-owned venture in Shanghai in May  2018.  

News link: Global Times 

China’s EV trio post record deliveries numbers in 2021

News: The US-listed Chinese EV trio of Li Auto, Nio, and Xpeng launched the new year by publishing record delivery numbers for 2021. Each noted that they had delivered nearly 100,000 vehicles in 2021, despite global chip shortages. All had doubled their deliveries from 2020. Xpeng Motors had stood out among its peers, delivering a record 98,155 vehicles last year, up 263% from its 2020 delivery count. It surpassed Nio, whose annual deliveries totaled 91,429 electric crossovers. Nio was hit by supply chain issues and changes to its manufacturing lines during the second half of last year. Meanwhile, Li Auto saw 2021 deliveries surge 178% year on year to 90,491 vehicles.

Context: Chinese automakers have been riding the wave of growing popularity of EVs in the country, boosted by a years-long national subsidy program and special license plates to EV buyers, among other policy measures. Nio, Xpeng, and Li Auto, all once struggling to stay afloat and beset by lackluster sales, are the poster children of the revolution. The trio has laid out ambitious plans to expand their sales and service networks as they vie to grab market share from internal-combustion vehicle segments. Analysts surveyed by Seeking Alpha expected Nio’s annual revenue to increase by 74% this year, Forbes reported, while Citigroup forecast that Xpeng’s deliveries could almost double to 175,000 units in 2022.

News link: South China Morning Post 

Alibaba’s head of autonomous driving quits

News: Alibaba has parted ways with Wang Gang, a renowned computer scientist who has served as head of the tech giant’s autonomous driving lab under its Damo Academy research division for three years, Chinese media reported on Jan. 5, citing people familiar with the matter. A former tenured professor at Nanyang Technological University, Wang joined Alibaba in early 2017 as the chief scientist for the company’s artificial intelligence lab and was tasked with improving speech recognition capabilities for its first smart speaker device, the AliGenie X1, launched later that year. Wang has begun working on a startup developing robot vacuum cleaners and has raised an unknown amount of funds, the sources added.

Insights: The move is noteworthy in many ways. For one, Chinese industry giants had hoovered up research talents and poured resources into exploring the potential of artificial intelligence (AI) over recent years. The rush is over given a slower-than-expected process of implementing AI in industries, as many top scientists give up the high salaries in the industry for academia, while others start up their own businesses. Wang’s departure comes after Li Lei, the director of ByteDance’s AI Lab, left the company to join the University of California Santa Barbara as a professor last August, following the resignation of ByteDance Vice President Ma Wei-Ying a year earlier, SCMP reported. Chinese tech powerhouses also struggle with executive turnover and layoffs, as Beijing’s regulatory clampdowns continue to weigh on the sector.

News link: TechNode 

Didi’s first earnings report after IPO: $4.7 billion loss

News: On Dec. 30, Didi reported its first earnings as a public company. It wasn’t pretty: The company lost RMB 30.4 billion ($4.7 billion) on RMB 42.7 billion ($6.6 billion) in revenue during the September quarter of 2021. To compare, the company reported a profit of RMB 665 million on revenue of RMB 43.4 billion in the same quarter of 2020. Didi’s largest source of revenue is still its domestic ride-hailing business, which yielded RMB 39 billion, down 12.9% from the previous quarter. The company posted an 8% quarter-over-quarter decline to 2.36 billion in ride volume over the period.

Context: Still the largest ride-hailing service in China by ride volume and revenue, Didi has been at the forefront in Beijing’s wide crackdown on local tech companies. Did’s business has taken a hit from a suspension order that has kept its services off Chinese app stores since July. Having been listed in the US for less than six months, the Chinese mobility giant on Dec. 3 announced plans to take its shares off the New York stock market and instead pursue a listing in Hong Kong. Beijing has yet to announce the results of its cybersecurity investigation into Didi, and the company’s shares have fallen more than 60% from its IPO price.

News link: TechNode 

Chinese ride-hailing platform T3 is close to securing RMB 5 billion ($775 million) in a funding round led by state-owned financial conglomerate Citic Group, Chinese media LatePost (in Chinese) reported Thursday, citing three unnamed sources. 

Why it matters: Didi’s rivals, especially those funded by state-owned enterprises, have received a new wave of investment since the nation’s leading ride-hailer was put under a cybersecurity review in July. 

Details: Two sources told LatePost that investment firms are “very enthusiastic” about this new opportunity in China’s ride-hailing market. “Firms have placed investment biddings of more than ten billion yuan,” the sources told LatePost.  

• Headquartered in the eastern city of Nanjing, T3 was launched in July 2019 with backing from state-owned automakers FAW, Dongfeng, and Changan, as well as tech giants Alibaba and Tencent. 
• In August, T3 completed, on average, more than 1.2 million trips per day, a 70% increase from December, the report said. T3 still lags far behind dominant player Didi, which averaged 20 million trips in the same month.   
• A spokesperson for T3 declined to comment on the report when contacted by TechNode on Friday and said the news should be “subject to the company’s official announcement.” 

Context: Cao Cao Mobility, the ride-hailing unit of Chinese private automaker Geely, raised RMB 3.8 billion from investors led by a group of state-owned enterprises in early September. 

READ MORE: Didi app ban ignites race for ride-hailing market share

Cao Cao Mobility, the ride-hailing unit of Chinese private automaker Geely, announced Monday that it had raised RMB 3.8 billion ($589 million) from investors led by a group of state-owned enterprises. The move came two months after the country’s dominant ride-hailer, Didi Global, was put under an ongoing cybersecurity review.

Why it matters: It is the biggest funding the company has received in two years, Cao Cao said in a statement (in Chinese) published Monday.

Details: This new round brought Cao Cao’s total funding to around RMB 5 billion. Lead investors include Suzhou Xiangcheng Financial Holding Group, an investment company held by the Xiangcheng district government of Suzhou, as well as Suzhou High-Speed Rail New City Group and three other state-controlled enterprises.

• Cao Cao said in the statement that it plans to use the funds to further scale its business, such as upgrading technology and expanding its fleet. 
• The company currently offers passenger transport services in 62 domestic cities, almost double the number that its rival T3 serves, but far behind the footprint of Amap, Alibaba’s ride-hailing and map platform.
• Geely began testing ride-hailing service Cao Cao in the eastern city of Ningbo in late 2015. It raised RMB 1 billion in Series A from several Chinese venture capital firms in January 2018.

Context: Chinese ride-hailing platforms, either backed by tech giants or legacy automakers, have been rushing to take market share from Didi after regulators ordered the ride-hailing giant in early July to temporarily stop adding new customers.

• Meituan’s ride-hailing unit and Cao Cao in July saw their volume of rides increase by 24% and 32%, respectively, from a month earlier, while Didi’s only rose by 13.1% during the same period, according to Ministry of Transport figures (in Chinese).
• In July, on average, Amap completed fewer than 5 million trips while Meituan completed around 1 million trips per day, Chinese media LatePost reported on Monday, citing people familiar with the matter. Didi counted about 25 million rides a day in the first quarter of 2021.

Read more: Didi app ban ignites race for ride-hailing market share

At 9 a.m. on a recent Thursday, Sheng Li got out of a Didi ride at his office in downtown Shanghai. The ride-hailing company has had a rough ride recently, but for users like Sheng, Didi is still the first choice when hailing a car.

The 28-year-old office worker says he’s been experimenting with other apps lately. He’s noticed longer wait times as Didi struggles amid a “cybersecurity investigation,” temporary removal from Chinese app stores, and lawsuits from angry US investors.

Sheng told TechNode he doesn’t worry about the privacy and security issues the regulators are investigating. “That’s a matter for the state, not us,” he said. For him, it all comes down to price, service, and wait times.

Still, a Shanghai taxi driver surnamed Wu told TechNode that he has shifted his driving time to other platforms including aggregator Amap (Gaode Ditu in China), as there are now “much fewer orders” from Didi (our translation). Some former Didi users even deleted the app from their phones in a show of patriotism, the Shanghai-based driver added.

Founded in 2012 as Didi Dache, Didi has long been dominant in China’s ride-hailing market. It fended off an early challenge from Uber, buying out the US company’s Chinese operations when it left the market in 2016. The most recent estimates put its share at 90% of the Chinese market.

Now, challengers are racing to take advantage of Didi’s troubles. Like Sheng, millions of Chinese users are trying out other ride-hailing platforms. The rivals have begun a price war, offering steep discounts and subsidies to win over users and drivers.

Default Didi

Didi remains the default for most users TechNode met during rush hour interviews in Shanghai. Although Didi apps are no longer available for download on Chinese app stores, those already on users’ smartphones still work.

Chris Sun, a Shanghai-based video producer did not hesitate when choosing Didi to hail a ride to the city’s railway station for a business trip last week. Speaking to TechNode on July 22, Sun said he had no plans to try other services, adding that he “has got used to” Didi, despite some technical flaws such as inaccurate pin locations from drivers (our translation).

Chen Jie, a recent graduate, is also sticking with Didi. The 23-year-old tried Alibaba-backed Amap last year, but immediately switched back to Didi, frustrated by long waits at peak times.

Springing into action

Shopping and delivery titan Meituan, a longtime rival of Didi, relaunched its standalone ride-hailing aggregator app Meituan Dache on July 13, followed by a WeChat mini-app with the same name last week.

Meituan has offered ride-hailing services since February 2017, but shut down its standalone app in 2019 to cut expansion costs. Since then, it’s been available only as a mini-program within Meituan’s main app.

The company has boosted its subsidies to attract users after the long absence. Using a RMB 10 ($1.54) coupon, TechNode paid RMB 23.4 for a nine-kilometer trip on Meituan Dache on July 16 in Shanghai. A ride on Didi for the same route cost RMB 35 on July 2.

Upstart T3, a joint venture of state-owned automakers FAW, Dongfeng, and Changan, is among the most ambitious contenders. From its base of 21 cities and 15 million users in 2020, the two-year-old ride hailer has set goals to enter 15 new cities and add an average daily order of 1 million rides by the end of July, Chinese media reported, citing a company memo. 

Daily downloads of the T3 app on iOS peaked at 60,000 million on July 2, later stabilizing to around 40,000. In June, T3’s app was downloaded just 10,000 times a day, according to data from app-tracking service Qimai. Chinese media report that T3 staff have been working long overtime hours as the Nanjing-based company rushes to expand.

Alibaba-owned aggregator and mapping service Amap, launched in 2018, is also offering massive subsidies to both riders and drivers, including RMB 100 coupons for rides and a one-week zero-commission period to new drivers. Amap downloads on iOS have more than doubled since July.

Meanwhile, Tencent and GAC-backed Ontime is offering 50% off coupons plus a RMB 25 incentive to those who invite a friend to use the platform and take their first trip. Not everyone is joining the price war.

Chinese media reported that management at Caocao Chuxing have decided not to drive down prices,, but the company has adopted the infamous 996 work schedule following Beijing’s investigation into Didi.

Future landscape

Didi could be back on app stores later this month. Regulations specify that cybersecurity reviews should take no more than 45 days, and 45 days after Didi’s review began will be Aug. 16. However, the same regulations authorize regulators to extend the review if they find that the matter is especially complex or serious.

Some observers believe that Didi could face significant threats from smaller ride-hailers that are expanding their presence in China’s growing inland cities.

“Didi is mature in tier-one cities but not in second or lower-tier cities. There is still an opportunity for online ride-hailing in China, and Didi will not have a 90% share in China forever,” Tu Le, founder and managing director of business intelligence firm Sino Auto Insights, said during an online interview on July 6.

Didi controlled more than 90% of China’s ride-hailing market share before the government’s investigation into the company. There might be “double-digit” market share redistribution if the subsidy war meaningfully deteriorates the Didi app or mini-program core experience, according to Michael Norris, head of research and strategy at AgencyChina.

The supply of drivers, who are sensitive to subsidy and platform policy changes, will be key to winning the battle. “Didi’s competitors need to poach drivers to the point Didi’s app becomes unreliable to hail a ride,” he said.

“The competitive landscape depends on how hard Meituan pushes. Recall that Meituan, with one eye on its balance sheet, backed away from self-operated ride-hailing in late 2018. Meituan’s foray into community group-buy, including associated financing activities, have primed investors for big moves.” Norris said.

Meituan declined to comment on the story.

Still, at least one ride-hailer has decided to advance at its own pace. Rather than spending lavish sums for a victory likely to be temporary, Shouqi, operated by the namesake automaker, has publicly stated its goal is high-quality development, focusing on passenger and driver safety along with data security. With a footprint in over 170 Chinese cities, the state-backed company is now the country’s sixth biggest ride-hailer but lags far behind Didi in monthly active users, according to figures published by app tracking firm Aurora Mobile in May.

“China’s ride-hailing market has always been strictly regulated. Looking ahead, compliant, healthy, and sustainable development will be the major path for all the players,” a Shouqi spokesperson told TechNode on July 20 (our translation).

Read more: How did Didi get in trouble with data regulators?

China Tech Investor is a weekly look at China’s tech companies through the lens of investment. Each week, hosts Elliott Zaagman and James Hull go through their watch list of publicly listed tech companies and also interview experts on issues affecting the macroeconomy and the stock prices of China’s tech companies.

Make sure you don’t miss anything. Check out our lineup of China tech podcasts.

In this episode, the guys are joined by Kendra Schaefer, partner at Trivium China and head of the firm’s tech practice. They dig into the ever-evolving saga at Didi, whose decision to go through with a US IPO against Beijing’s wishes has brought about waves of regulatory wrath against the ride-hailing and mobility giant. Kendra’s insights are helpful for investors, analysts, or anyone hoping to understand the new rules of the road for China’s tech firms.

Hosts may have interest in some of the stocks discussed. The discussion should not be construed as investment advice or a solicitation of services.

Watchlist:

• Tencent
• Alibaba
• Baidu
• Bilibili
• Xiaomi
• JD
• Pinduoduo
• Meituan-Dianping
• Kuaishou

Hosts:

• Elliott Zaagman– @elliottzaagman
• James Hull– @jameshullx

Guest:

• Kendra Schaefer – @kendraschaefer

Editor:

• Peter Isachenko

Podcast information:

• iTunes
• Spotify
• RSS Feed
• Music: “Hey Ho” by Steve Jackson, Royalty Free Music

Didi is everywhere in China. In the country’s major cities, you’re unlikely to find someone that hasn’t hailed a ride through its platform. The company’s popularity led the Uber-like taxi app to a much anticipated New York IPO on June 30. Didi raised a whopping $4.4 billion—the largest amount of any Chinese company going public in the US since 2014.

Then, Didi caught the attention of Chinese regulators.

For the first two days after going public, Didi’s stock performed well, rising more than 17% from its offering price. Then, the ride-hailer’s US debut took a jarring turn: China’s top internet regulator announced a cybersecurity investigation into the company.

Didi’s share plunged more than 20% on the news. Investors say that the move blindsided them. Apart from scrutiny at home, the company now also faces lawsuits from US investors for failing to disclose its regulatory risks. 

According to the government’s official announcement, Didi faces regulatory backlash over data security. The regulator did not provide any further details.

What kinds of data does the company hold that led to regulators souring on the company? This week, we combed Chinese media reports on the investigation into Didi, hoping to provide a clearer picture of what led the company to fall out of favor. All quotes have been edited for clarity.  

Didi’s big data analytics 

On July 2, the third day after Didi’s IPO, China’s internet watchdog launched a “cybersecurity review” of the ride-hailing company, citing national security concerns.

Then two days later, on a Sunday night, the same regulator—the Cyberspace Administration of China (CAC)—ordered app stores in China to remove Didi’s app. The CAC said the app “seriously violated Chinese laws and regulations on personal information collection and usage.”

Of all tech majors in China, Didi collects the most comprehensive data on personal travel. Its ability to do big data analysis on users’ activities and habits can carry security risks, said China’s nationalistic tabloid Global Times on July 4. 

The news of the investigation into Didi began trending on popular microblogging site Weibo over the weekend. The government’s inquiry won cheers from many Chinese internet users, who see the move as a means of protecting China’s national security and the data privacy of its citizens. 

Why China’s ban on Didi’s app is winning applause
Global Times, July 4

Didi Chuxing is a high-tech internet company that has greatly popularized online ride-hailing services in China. But the company undoubtedly collects the most detailed personal travel data out of all the major internet companies. It’s very worrying that, according to the Cyberspace Administration of China’s announcement, Didi may have violated laws in the way it collects and uses personal information. Didi appears to have the ability to perform big data analysis on users’ activities and habits, which could become a potential security risk to people. 

As a matter of principle, we hope that internet giants can minimize collection of users’ data instead of capturing as much information as possible.

Internet behemoths are used to calling the shots in their sectors, but the government cannot allow them to make the rules governing personal information. The government has to control the rules and standards, making sure that internet giants minimize their user data collection. Internet companies shouldn’t be allowed to have a super database of user information that is more detailed than that controlled by the Chinese government, let alone use the database however they please.

The government needs to be vigilant with a firm like Didi, which went public in the US and consists of top foreign stakeholders. This is not only a matter of protecting personal information but also a matter of national security. Regulating Didi doesn’t mean the country is stunting the growth of the company. It serves to eliminate risks so that the users will feel more comfortable, thus giving the company a bigger market. 

Maps and road traffic data

Experts told the Chinese business magazine 21st Century Business Review that Didi’s collection of road traffic data is at odds with China’s national security.

Didi’s investigation gives a stern signal
Cao Yanjun, Yang Song
21st Century Business Review, July 5

Cybersecurity investigations into internet companies will become the norm. 

Di Wei, an assistant professor of economic law at East China University of Political Science and Law, told 21st Century Business Review that Didi holds road traffic data including that which deals with surveying and mapping, traffic flow, and charging stations. This data is vital data, according to the third article in the “Provisions on the Management of Automobile Data Security (Draft for Comment Solicitation)” that was released on May 12. The provision defines vital data (to national security) collected by auto companies.

Data collected by automobile companies is closely connected to individual privacy and national security issues. For example, when a user follows a given route, companies can collect data on home addresses, work addresses, and surrounding geographic data.

“The potential risk lies in exposing personal information, and even data vital to the national interest, which in turn affects military safety,” Di Wei said.

Driving record data

Didi’s record of driving data and driver and passenger security information pose major security risks to China if leaked, according to Classification Evaluating Reviews, a WeChat account that promotes China’s multi-level protection scheme, a tiered system of national cybersecurity levels. 

China launches its first cybersecurity investigation! Didi gets investigated
Classification Evaluating Reviews, July 2

Cybersecurity investigations aren’t administrative interviews but preventative safety precautions. Didi has already become an essential part of China’s internet traffic infrastructure. Didi’s datasets of driving records, and driver and passenger security information pose a massive security risk. 

According to China’s multi-level protection scheme, we can infer that Didi’s network has been classified as vital information infrastructure, thus prompting the cybersecurity investigation.

It might take a few months for Chinese regulators to elaborate on what the Didi data in question includes. In the meantime, Chinese media reports show that Didi’s massive collection of mapping and traffic data, and its ability to provide big data analysis using its data, may have alerted the country’s regulators.

Chinese ride-hailer Didi went public on Wednesday on the New York Stock Exchange in a much anticipated US IPO, raising $4.4 billion. 

Why it matters: Didi is the biggest Chinese IPO in the US since Alibaba’s $25 billion listing in 2014.

Details: The company priced its IPO at $14, the top of the expected range. It opened at $16.65 per share on Wednesday, and closed at $14.14, a modest 1% up from the initial offering price. 

• Two days before Didi’s debut, CNBC’s Jim Cramer recommended the stock on his show “Mad Money.” “If you want to speculate on a Chinese IPO, you’ve got my blessing to bet on Didi. I would try to get as many shares as you can,” Cramer said.
• David Trainer, founder of New Constructs, a US-based investment research company wrote that Didi is overvalued and worth “no more than $37 billion,” a little over half of its current valuation in a Wednesday analysis. He worries that Chinese regulatory risks and an “unprofitable” business model will hurt the company’s performance, despite Didi having a 90% market dominance in China. 
• Didi reported losses of $1.6 billion on $21.6 billion in revenue in 2020. The company turned a profit of $800 million on $6.4 billion in revenue in the first quarter of 2021, according to its IPO filing. 

Context: Didi performed better than its US counterparts on the first trading day. Uber fell below its initial offering price in its 2019 debut. 

• In May 2019, Uber opened below its initial offering price of $45 and dropped more than 7% on the first trading day. 
• Like many other leading tech companies in China, Didi faces increased regulatory scrutiny. Reuters reported in June that Didi is facing antitrust investigations from the country’s top market watchdog on whether the company had used unfair practices to squeeze out smaller competitors. 

READ MORE: The Chinese gaming startup outperforming Tencent overseas

With contributions from Jill Shen.

Chinese ride-hailing company Shouqi apologized on Monday for a safety incident in which a woman exited a moving car in an alleged attempt to escape her driver. Police found the driver violated the official regulation governing the taxi sector in the region, but his actions did not amount to a criminal offense, according to a Monday statement. 

Why it matters: The incident became the talk of the Chinese internet over the weekend, prompting a widespread backlash against the state-backed ride-hailer and spurring a discussion on women’s safety in China. 

• Ahead of the police report, Shouqi Limousine & Chauffeur (Shouqi Yueche) and the woman surnamed Gao released contradictory statements regarding the incident. Shouqi said the incident was caused by “miscommunication,” while the woman said she felt threatened by the driver. 

Details: Police in Hangzhou’s Fuyang district said the driver violated driver’s regulation in Hangzhou but he did not commit a criminal offense. The transportation department will determine the punishment for the driver and Shouqi. 

• Police said the driver violated regulations by changing routes twice without getting Gao’s permission. The police said both the driver and Gao called the police after the incident. 
• Police interviewed the driver and Gao, watched surveillance footage, and listened to recordings from the drive. Chinese ride-hailing companies regularly record rides for safety reasons. 
• Police said the driver and Gao had several short exchanges and the two parties disagreed about route changes. 
• Fuyang government officials set up a dedicated investigation team to look into the incident. The team includes members of the police and the transportation department, according to the police statement. 
• Shouqi promised to offer more communication training to drivers in a Monday statement (in Chinese), released hours after the police statement. 
• At the time of the publication, Gao has not made any new public statements. 
• The incident happened on June 12. The public first heard of it over the weekend. 

Context: Shouqi is the latest ride-hailing company to become embroiled in controversy over safety issues. Despite efforts made by ride-hailers and lawmakers, such as mandating ride recordings and adding call-police functions into their apps, the public is still sensitive to the issue. 

• In 2018, two women were murdered by their drivers during separate rides on China’s dominant ride-hailing platform Didi, forcing the company and other ride-hailers to suspend their carpooling services. When Didi resumed the service in November 2019, the company initially barred women from booking carpool rides after 8:00 p.m. for safety reasons. Didi quickly backtracked the decision and made carpool rides past 8:00 p.m. unavailable to all people after public outrage. 

Chinese ride-hailing company Shouqi is under fire for safety issues after a woman in Hangzhou claimed she injured herself by falling out of a moving car while attempting to escape a dangerous situation.

On June 12, a passenger surnamed Gao jumped or fell out of a moving taxi during a ride provided by Shouqi Limousine & Chauffeur (Shouqi Yueche) in the eastern city of Hangzhou.

Gao said she attempted to escape because she was afraid her driver was going to attack her. She suffered a bone fracture and multiple scrapes from the incident, according to her statement.

Gao and Shouqi have since released contradictory statements online regarding the incident, prompting wide debate online over what happened during the ride. 

Why it matters: The incident raises questions about the state-backed luxury ride-hailing company’s ability to provide a safe, premium ride. 

• Shouqi has presented itself as a safer, upmarket alternative to competitors like Didi, making its name by providing rides to high-level officials, such as employees of the State Secrets Protection Administration in Beijing. 

Shouqi’s statement: The ride-hailing company released a Weibo statement on Saturday (in Chinese), saying the incident was due to a “miscommunication.” 

• Shouqi apologized for the incident and said Gao jumped out due to misunderstanding with the driver, promising to cover Gao’s medical expenses. Shouqi said the driver called the police after Gao jumped out. 
• According to Shouqi’s account, police told the company that the incident was caused by poor communication between Gao and the driver, which led to Gao getting out of the car. The police have not issued a public statement.
• Shouqi added that the recording of the ride showed no arguments and minimal interaction between Gao and the driver.
• A Shouqi staff who asked not to be named told TechNode that the company is in the process of addressing the situation. 

Gao’s statement: A day later, Gao described the company’s statement as a “fabrication,” publishing her own account of the incident (in Chinese). Gao added that she didn’t have access to the recording, and Shouqi refused to share it with her. 

• Gao said the driver began “checking her out and trying to start a conversation with her” as soon as she entered the car. After the driver changed the routes twice without asking her for permission, she started to “panic,” she said. She then resorted to opening the door to force the driver to stop the car, according to her statment.
• As the driver continued to drive, Gao “fell out of the open car and rolled a couple of times on the ground … crying out for help hysterically,” said the statement. 
• Gao wrote that passersby, rather than the driver, called the police.
• She also wrote that she had not heard from the company about medical expenses.
• Gao did not reply to TechNode’s requests for comment. 

Context: Ride-hailing companies in China have long faced scrutiny over safety concerns, forcing market leader Didi to suspend a popular service in 2018 and introduce new safety features in a bid to regain trust.

• Founded in 2015, Shouqi is a premium ride-hailing company focused on affluent clients in government and large companies. Unlike Didi, which still operates at a loss, Shouqi said in a 2020 press release that it had turned a profit in July 2019 in Shenzhen and Shanghai. In April 2020, the company has reached profitability nationwide. 
• In 2018, ride-hailing giant Didi faced public outrage after two women were murdered by their drivers on separate occasions. One of the drivers was sentenced to death, while the other committed suicide after the crime. Following the incidents, Didi fired senior executives and suspended its carpooling service. 

China’s market regulator is investigating Didi on whether it violated antitrust rules, Reuters reported Wednesday night. Didi called the report “unsubstantiated speculation.”

Why it matters: The probe report comes less than a week after the ride-hailing giant filed for a US IPO on Thursday. It remains to be seen whether the news will affect the company’s plan to go public. 

• A slew of tech major Chinese companies have faced antitrust scrutiny in the last year as part of a broad push to regulate the country’s powerful tech sector. 

READ MORE: The Chinese gaming startup outperforming Tencent overseas

Details: Unnamed sources told Reuters that China’s market regulator, the State Administration for Market Regulation (SAMR), is looking at Didi on suspicion of anti-competitive practices. 

• Regulators are also investigating whether Didi used anti-competitive practices to squeeze out smaller rivals, and whether Didi manipulated the price of rides, Reuters wrote. 
• The probe is in early stages, and the regulator has not yet given detailed instructions to Didi, according to Reuters’ report.
• A Didi spokesperson told TechNode on Friday that it refused to comment on “unsubstantiated speculation from Reuters’ unnamed sources.”

Context: Didi, dominant in China’s ride-hailing market, has been fined several times this year by market regulators for antitrust violations. 

• In March and April, SAMR fined Didi’s subsidiaries a combined RMB 2 million (around $310,000) for insufficiently disclosing past acquisitions and investments for antitrust reviews. 
• Didi was punished in April alongside several other Chinese tech giants, including Tencent and Meituan, for failing to seek antitrust clearance for their investments.
• Didi has dominated the ride-hailing market since merging with Alibaba-backed Kuaidi in 2015. A year later, Didi bought out Uber’s China business as the American rival left the market. 

Chinese ride-hailing platform Didi filed for an initial public offering on Thursday. The company plans to trade on either the New York Stock Exchange or Nasdaq. 

Why it matters: Valued at $62 billion, Didi is among the world’s five highest-valued unicorns. The company’s listing could be one of the biggest IPO this year. 

• The Beijing-based startup is also the world’s biggest mobility platform, with around 156 million monthly active users (MAUs) in the three months ended March 31, 2021, according to its prospectus. To compare, Uber had 98 million MAUs during the same period.

Details: Didi’s IPO filing highlights its quick recovery from the impact of the Covid-19 pandemic. The company reported a net income of RMB 196 million ($30 million) in the three months ended March 31, up from a net loss of nearly RMB 4 billion a year earlier.

• Didi’s revenue for the first quarter of this year was RMB 42.2 billion, doubling its figures from the same period in 2020. The company reported a RMB 10.7 billion loss on RMB 141.7 billion in revenue for 2020. 
• Didi plans to use 30% of the proceeds from its IPO to fund its international expansion. The company intends to spend another 30% on technology development, including electric vehicles and autonomous driving, according to the filing.
• Didi is ramping up its push into electric vehicles (EVs) to cut operational costs. Last November, the company released its first EV, the D1, with Chinese carmaker BYD. It also partnered with Guangzhou Automobile Group Co Ltd (GAC Group) to develop self-driving cars last month.
• Didi didn’t disclose how much money it seeks to raise, but listed a placeholder amount of $100 million on the filing.

Context: As part of its rapid expansion plan for the next three years, Didi is expanding into overseas markets and aggressively entering new verticals. 

• In November, the Chinese mobility giant launched its ride-hailing service in Auckland, New Zealand, three months after making its debut in Russia. It is also reportedly eyeing western Europe, where it seeks to enter the UK, France, and Germany.
• Domestically, Didi has been diversifying its business by expanding into grocery delivery and mini-van services for logistics. In January, the company reportedly closed a $1.5 billion round of funding for its mini-van service. It plans to spin off its grocery delivery service in a separate listing as early as next year.

Chinese search firm Baidu is launching a fully driverless, paid ride-hailing service in the outskirts of Beijing beginning on May 2, the company confirmed on Thursday.

Details: Baidu will begin charging passengers for rides with its fleet of 10 driverless vehicles in western Beijing’s Shougang Industrial Park beginning on Sunday.

• All rides will be offered without a human driver behind the wheel, though a driver will sit in the passenger seat to ensure safety, a spokeswoman told TechNode on Thursday.
• The launch follows Baidu’s fully driverless tests within geo-fenced areas in several domestic cities including Beijing and the northern city of Cangzhou during the second half of 2020.
• Shougang Park is more than 20 kilometers (12.4 miles) away from downtown Beijing, and is formerly the site of a plant belonging to state-owned steel company Shougang Group. The Beijing 2022 Olympic Games Organizing Committee is located at the industrial park.
• A Shougang Park representative told Beijing Daily (in Chinese) last week that a fleet of more than 100 self-driving vehicles will be in service during the 2022 Winter Olympics in February. The fleet will include robotaxis, robobuses, and delivery robots offered by Baidu, JD.com, and other companies.  

Context: Baidu in March became the first Chinese company granted permission to offer robotaxi rides to paying customers in Cangzhou, a city near Beijing in northern Hebei province.

TikTok bets on social shopping

TikTok, Beijing-based ByteDance’s short video app, is reportedly planning several new features for its e-commerce expansion in the US. The move builds on the success of a similar push from its Chinese version Douyin, now a major player in China’s livestream e-commerce market.

Livestream shopping has become widely popular in China. Another features allows TikTok users to share links to products and automatically earn a commission. The viral short video app piloted a shoppable experience with Walmart in December. (Financial Times)

Luckin bankruptcy

Luckin Coffee filed for bankruptcy protection in the US on Friday to fend off US creditors during a liquidation process that is already underway in the Cayman Islands, where it is registered. The company will continue its China operations, “including paying suppliers, vendors, and employees.” The filing comes almost a year after the company admitted falsifying RMB 2.2 billion ($310 million) in 2019 sales. (TechNode)

Regulator scrutiny

Beijing has imposed a RMB 3 million fine on the operator of Vipshop.com for unfair competition, just a month after the flash sale online retailer was penalized RMB 500,000 for irregular pricing. (TechNode)

Didi boosts group-buy unit

Ride-hailing giant Didi Chuxing is planning to raise $4 billion for its community group-buying unit, doubling down on the rising sector to diversify its revenue streams amid slowing growth in its core business. Didi could chip in $3 billion while seeking about $1 billion from external investors. (Bloomberg)

READ MORE: Friendly neighbors are the key to China’s community group-buying craze

Fresh produce e-commerce

Suning Logistics, part of omni-channel retailer Suning Group, rolled out Su Xian Da, a new fully linked cold chain solution from warehousing to distribution. The service offers cold-chain delivery service to consumers within 48 hours. Suning, along with a group of online sellers and delivery services, will continue its logistics and delivery services during the weeklong Spring Festival holiday, generally a low season for China’s logistics industry. (Tencent, in Chinese)

One of the prime industries slammed by the pandemic-induced economic downturn, China’s ride-hailing market is unlikely to recover its freewheeling, easy money ways.

Even before the coronavirus lockdowns, ride-hailing platforms in China struggled with increasing competition, as their usage slowed significantly in the country’s maturing transportation market.

The safety measures may not have been enough. Giant players seek to thrive, not just to survive, in a post-coronavirus world. To ensure growth, they have been introducing low-cost services and entering smaller cities. But the road to recovery of ridership could be slow and bumpy. 

Standing at a crossroads, China’s ride-hailing industry faces economic uncertainty, increased competition, and more regulation as the government steps up to offset the disruption caused by Covid-19. Looking ahead, as Chinese taxi companies and automakers ramp up, ride-hailing giant Didi could pay a heavy price to maintain its dominance.

This month, we review what happened in 2020 and what these trends mean for the future of ride-hailing in China.

Taxis vs ride-hailing

China’s ride-hailing and taxi sectors are converging after years of clashes, as both sides seek a level playing field and additional room for growth amid a deep economic downturn.

• Traditional taxi services have battered heads with Didi, charging the country’s biggest ride-hailing platform with unfair competition, partly because Didi’s ride-hailing drivers could offer cheaper fares with a dynamic pricing model. Taxi drivers have also been angered by Didi’s dispatch algorithms. These are the real-time mechanisms that match drivers with passengers; taxi drivers believe they favor Didi’s own vehicles over taxis, especially for long trips.
• A Didi spokesperson told TechNode that its technology facilitates matching of demand and supply and therefore helps drivers to grow their income, by dispatching, for example, a ride in the same direction as a driver’s route home when he comes off duty.
• Didi has offered taxi-hailing services since its inception, but it now only facilitates 3 million taxi rides per day. That’s only around 6% of the country’s daily taxi trips, suggesting massive growth potential. Until recently, the company didn’t charge state-backed taxi fleets that offered rides on its platform, while Didi drivers pay the company a 20% commission for every ride.
• Things started to change last summer, when Didi for the first time announced plans to charge taxi drivers. The company introduced the charges in lower-tier cities in August and then extended them to some of the country’s biggest cities. In Shanghai, Didi takes a fee of at least RMB 1,000 ($153) from a cab driver each month, around 10% of the driver’s monthly income. This made some drivers unhappy, a driver surnamed He told TechNode in late December.
• Didi explained that revenue from taxis will cover costs and boost demand by offering subsidies to drivers and passengers, and add an IT system for taxi fleets that helps with efficiency. Meanwhile, Alibaba’s mobility service, AutoNavi, has said that taxis and private vehicles will be treated equally on its platform, although drivers like He remain skeptical of the claims.

Untapped markets

Chinese mobility giants are hoping that expansion in the country’s hinterland will compensate for the steady chilling of the once red-hot markets of major cities.

• Didi has launched a budget ride-hailing app called Huaxiaozhu. The platform takes a leaf out of social e-commerce giant Pinduoduo’s book: It offers discounted rides to people who share the app with their friends on social networks. 
• Didi expects Huaxiaozhu to carve out a niche by winning the hearts of young, price-sensitive passengers in the 300 or so lower-tier cities where it operates. Currently, around 20 of China’s biggest cities account for 60% of Didi’s ride volume in its home market, but growth of its core business has been stagnating since 2017. The company’s woes were compounded by a drastic drop in rides early last year due to Covid-19.
• Looking ahead, another round of subsidy wars seems inevitable for Didi: more big tech companies are looking to tap new growth opportunities by offering cheaper services. In December, Alibaba-backed bike rental platform Hellobike launched a ride-hailing service in China’s southern Guangdong province. It claims its fares are 40% cheaper than its competitors. Early last year, Didi launched a RMB 10 billion subsidy program to attract drivers and riders in more than 130 cities across China.

Traditional automakers

Chinese automakers are collectively pushing into the ride-hailing market in order to gain a foothold in a world where vehicle ownership would no longer be a preferred choice for customers. 

• Volkswagen’s Chinese partner SAIC Motor is one of the automakers that could become a contender for Didi. Last month, the company closed a RMB 300 million Series A round from Alibaba and China’s top battery supplier CATL for its mobility service platform Xiangdao Chuxing. The platform offers on-demand ride-hailing and car rental for individual and enterprise customers, among other services.
• State-owned SAIC says its premium ride-hailing service has 20 million users after two years of operation, although its number of active users is only 1% of Didi’s, according to market research firm Analysys.
• Still, Didi has reason to worry. In September, SAIC launched a separate online taxi-hailing service in Shanghai with the support of the city government. Each driver is currently given as much as RMB 200 per day for taking orders on the platform, local taxi driver He told TechNode. Nearly every licensed taxi in the city is accessible through the app, SAIC said.
• More automakers are nibbling away market share from Didi. T3, a ride-hailing service launched by three state-owned automakers, last month said it plans to triple its order volume by entering 48 cities around China this year. The service currently offers 1 million rides a day after going live in mid-2019.

Regulation

Ride-hailing services face increased government intervention and regulatory uncertainty, as Beijing seeks more control to boost an economy hard hit by the pandemic and its aftermath.

• As the central government tightens the reins on big tech firms with anti-monopoly measures, a regulatory storm might be brewing for Didi. The China Taxi Industry Alliance last month called for regulators to review Didi’s 2016 acquisition of Uber’s China unit, according to an open letter published on its WeChat account (in Chinese).
• The industry group, formed by more than 50 licensed taxi companies, also called for Didi to be punished for its alleged monopolistic practices including offering expensive subsidies to promote Huaxiaozhu. A week after the proposal, Minister of Transport Li Xiaopeng pledged to enhance anti-monopoly regulation in China’s transportation sector as one of his ministry’s top priorities in 2021.
• Beijing is also looking to increase its influence in the technology sector as part of its five-year plan to boost its domestic market, last month requiring ride-hailing services to develop “hailing by one-click” features to accelerate adoption among senior citizens.
• Experts believe such moves could help reduce government expenditures for seniors’ medical care and unlock new sources of economic growth. Didi and seven ride-hailing platforms are now required to simplify their apps and launch the specially-designed feature before the upcoming Chinese New Year holidays in February, reported Chinese media.

Capital

Chinese ride-hailing companies are flocking to mainland and Hong Kong stock markets for IPOs, hoping to build their war chests to weather economic uncertainties and strengthen their balance sheets.

• Didi has finally resumed its efforts to go public, two years after putting the plan on hold following the murders of two female passengers using its popular carpooling service, Hitch. Claiming back in May that its “core business” was finally profitable, the company is reportedly (in Chinese) looking to list this year in Hong Kong at a valuation of HK$600 million ($80 billion). Didi has been in early talks with Goldman Sachs among other banks about possibly underwriting the offering.
• Didi has been diversifying businesses outside of its ride-hailing roots in search of new growth markets to justify its valuation, when its core business still struggles due to Covid-19. Its grocery delivery business in late 2020 exceeded 10 million orders per day, putting it at odds with Meituan, Pinduoduo, and more giants rushing into the grocery delivery sector.
• NIO-backed Dida, a distant second to Didi in China’s massive ride-hailing market, in October raced ahead by filing in Hong Kong for what looks to be Asia’s first ride-hailing IPO. Meanwhile, Geely’s ride-share unit Caocao in November hired UBS to raise its Series B and finally list on the public market, without revealing further details.

Luckin fined, rolls out a new strategy

• Chinese authorities imposed a RMB 61 million ($9 million) fine on Luckin and a group of affiliated companies for creating unfair competition by engaging in sales fraud. This is the first fine the Chinese coffee chain operator has received after admitting to financial fraud in early April. (TechNode)
• Luckin, still reeling from the scandal, adjusted its growth strategy to focus on shoring up the repurchase rate for existing users rather than attracting new users. To cut costs, it is using privately managed groups on Tencent’s enterprise communication app Wechat Work to push coupons, encouraging repeat business. Users scan QR codes displayed in its offline stores or WeChat official account posts. Luckin has reportedly amassed over 180,000 private traffic users, and the figure is growing at around 60,000 per month. (Iresearch, in Chinese)

VCs investing into China’s new brands

New Chinese brands are capitalizing on growing consumer interest in domestic brands and products, especially those featuring traditional Chinese styles and cultural elements. E-commerce giants like Alibaba and short video apps like Kuaishou are beefing up support for such brands with more online traffic as well as updated supply chains.

• Perfect Diary, China’s hit e-commerce-based cosmetic brand, reportedly received $140 million investment at a valuation of $4 billion, double the $2 billion market cap it was rumored as having earlier this year. Private equity firms Warburg Pincus and The Carlyle Group invested $70 million each in the round as the company prepares a US listing reportedly slated before year-end. Zhang Donghao, chief financial officer of e-commerce site Vip.com, will reportedly join the three-year-old company to oversee stock market debut protocols. (All Weather TMT, in Chinese)
• Jiangxiaobai, a Chinese liquor brand, announced Sept. 24 the completion of a Series C for an undisclosed amount led by China Renaissance’s Huaxing Growth Capital. Baillie Gifford, Loyal Valley Capital, CMB International, Kunyan Investment Management, and Wens Investment joined the round. (Xinhua, in Chinese)
• Miniso, a Tencent-backed household product brand, filed its prospectus with the US Securities and Exchange Commission on Sept. 24 for a New York listing. In the same week, the company facing scrutiny over product safety concerns. The Shanghai medical product regulator found that chloroform levels in a nail care product sold by the company was 1,400 times higher than the standard allowed by the state.  (Sina Tech, in Chinese)

Grocery delivery battle, now even hotter

• Users of Alibaba’s food delivery platform Eleme will soon be able to order from Tmall Supermarket, Alibaba’s online grocery marketplace. Orders will deliver to users within an hour for some locations or a half-day for others, rather than the previous 1 to 2 day delivery window for orders placed via the Taobao or Tmall apps. The move follows shortly after Alibaba made products from Freshippo available on the platform, as the e-commerce giant further integrates its local lifestyle services. (Krasia)
• Chinese ride-hailing giant Didi rolled out last Friday an independent app for its grocery delivery platform Chengxin Youxuan, a program it began piloting in June. The company said the service had more than 550,000 orders per day in three cities within China’s southwestern Sichuan province. The pilot will expand to more provinces in September. Entering the market means the company will be competing with grocery delivery giants ranging from Meituan to Alibaba. (Tech Globe, in Chinese)

For the past two years, ride hailing giant Didi Chuxing has laid low, waiting out a storm of public outrage that followed incidents when two female passengers who used the platform were killed by their drivers.

Now, the days of biding its time are over. The company has launched a slew of new brands and continued its push abroad, going up against Uber in more markets (and entering Russia).

Didi also recently restructured, creating a maze of sub-brands that cover diverse consumer groups in higher- and lower- tier cities across China, most notably launching a low-cost ride hailing service and rebranding its taxi-hailing app.

Since spring, the company has even made a foray into logistics and grocery delivery, in a bid to provide a range of mobility services within a mega ecosystem.

So what prompted this sudden flurry of activity?

Bottom line: Didi, the world’s second biggest tech unicorn, has a problem: growth in China’s ride-hailing market has plateaued, while the company faces price competition from dozens of well-funded smaller rivals willing to subsidize rides. With the company looking forward to a much-rumored IPO, it needs new sources of growth to justify its $56 billion valuation.

• Didi has three big ideas about how to stimulate new growth: new services, lower tier markets, and going global.
• Didi targets more than 100 million orders per day and reach 800 million monthly active users (MAUs) worldwide over the next three years, which would be more than five times Uber’s 2019 figures. Didi saw about 10 billion rides a year, or an average of 27 million per day, a spokesperson told TechNode in November.

Slow growth

After years of double-digit growth, China’s ride-hailing market expanded an anemic 3.42% in 2019, according to figures from China Internet Network Information Center, partly due to a government crackdown on unlicensed drivers.

Didi, China’s largest ride-hailing platform, has been affected. Ride volume fluctuated between 20 and 30 million trips per day from 2017 to 2019, an unnamed Didi investor told Caixin (in Chinese), and reportedly fell to a nadir of 5 million during the Covid-19 outbreak.

However, there are positive signs for the company. In June, Didi said that its ride-hailing business had returned to its pre-pandemic level, still far off its three-year target of 100 million daily orders. The company set a new daily record last month—CEO Cheng Wei announced that total volume surpassed 50 million on Aug. 25, China’s Valentine’s Day.

After years of losses, the company’s ride-hailing business also recently turned a profit for the first time, Didi President Jean Liu said in May.

Ride-hailing challenges

Didi is a clear winner in China’s ride-hailing market, controlling more than 80% of the market since its 2016 merger with Uber China, but it faces challenges at home.

The company has little control over the price of rides, since it competes with dozens of small players, mostly backed by tech giants and legacy automakers. Many offer generous subsidies to users, including occasional free rides.

Even network effects don’t give Didi as much of an edge as you might think, since apps including Alibaba map service Autonavi, Baidu Map, and Didi’s old rival Meituan all offer ride-hailing aggregation services, leveling the playing field between the giant and its Lilliputian rivals. Earlier this week, Didi entered a partnership with Chinese tech behemoth Tencent, a long-time backer.

Didi’s troubles have also been compounded by increasingly tight rules over hiring after the high-profile murders, leading to a significant shortage of drivers able to operate on its platform.

Nevertheless, there is still a huge space for growth in China’s ride-hailing market. More than 90% of Chinese passengers hail a cab on the streets rather than through ride-hailing apps, according to Didi (in Chinese). Didi currently facilitates 3 million taxi rides each day, just 6% of the country’s daily taxi trips, Latepost reported.

More cities

In a bid to capture more of China’s rides, Didi launched a new budget ride-hailing app earlier this year, and rebranded its licensed taxi service to meet varying demands from users in higher- and lower-tier cities across China.

Budget rides: Huaxiaozhu (which literally translates to “flower piglet”) targets users from lower-tier cities with cheap rides. The platform offers cheaper rides than Didi’s core service, and includes gamified social features.

• Featuring fixed, rock-bottom prices and coupons for early adopters who promote the app online, Huaxiaozhu became known as the “Pinduoduo of ride-hailing” immediately after launch.
• First launched in Linyi, a third-tier city in the eastern Shandong province, and the southwestern city of Zunyi in late March, the service quickly gained traction thanks to a campaign that charged only RMB 1 ($0.15) for a user’s first trip.
• Even without discounts, a 100 km or above journey on Huaxiaozhu is at least RMB 30 cheaper than that on Didi, Chinese media has reported.
• Didi has since announced an RMB 10 billion subsidy program in bid to enter an additional 130 small- and medium-sized cities.

Licensing questions: The pig has been forced to suspend services a dozen cities over a pretty basic issue: regulators say it hasn’t got a license to offer rides, according to multiple Chinese media reports.

• In a statement earlier this month, Didi argued that since Huaxiaozhu is a product developed by Didi, it shares the parent operating license. But some legal experts have argued that in China a parent company does not always share operating licenses with its subsidiaries.

Kuaidi New Taxi: Aside from ride-hailing, Didi also rebranded taxi-hailing service Kuaidi New Taxi, and reshuffled to spin off its taxi business unit from its ride-sharing group, with the head reporting directly to CEO Cheng Wei. The move appears to be part of preparation to monetize the service. Currently, Didi offers government-backed taxi-fleets commission free traffic.

• As part of the rebranding effort, in September Didi began dishing out RMB 100 million in subsidies to taxi riders.
• The move appears to have been put on hold. Didi CEO Cheng Wei told Chinese media this month that there will be no “profit goals” for Didi’s taxi business “for some time to come” (our translation).

Ride-hailing platforms have low penetration in China’s lower-tier cities, and residents in these areas are more accustomed to hailing a taxi on the street than through an app. Not everyone welcomes disruptive innovation—Didi’s success depends on whether it can navigate regulators’ demands in these areas in order to avoid its services being suspended.

More Didi services

In its hunt for growth, Didi has also dived into China’s grocery delivery industry, and started deploying delivery vans in cities around the country.

The company has taken the same approach it has consistently used for ride hailing–offering heavy subsidies to users and drivers to crack the market open. But in these new industries, Didi, a leviathan in ride-hailing, is a small fish.

The company faces relentless competition from dominant companies including Meituan, China’s mega-lifestyle platform, and Kuaigou Dache, the logistics arm of Chinese online classifieds marketplace 58.com.

Delivery vans: In May, Didi started hiring van drivers in the eastern city of Hangzhou and Chengdu, capital of the southwestern Sichuan province. The service targets urban people who are moving homes and businesses that need commercial deliveries. Didi began offering drivers commission-free use of the platform for thirty days.

• Within a month, Didi launched the service with 8,000 drivers, Chinese media reported, citing a company representative. The company said order volume in Hangzhou and Chengdu surpassed 10,000 collectively in its first day of operation.
• That figure doubled by mid-July, and Didi expanded the service to six major cities including Shanghai and Nanjing, capital city of the eastern Jiangsu province in August.
• The company is up against cutthroat rivals. Kuaigou Dache and Lalamove, a Hong Kong-based startup backed by Sequoia China and Hillhouse Capital, currently lead the market. The two companies account for 80% of the sector, with a collective 1.5 million drivers and 15 million active users as of March.
• By comparison, so far over 130,000 drivers registered on Didi’s logistics service platform. Daily orders are now over 100,000.

Delivering essentials: Didi has vied for a piece of the country’s food delivery market since 2018, when it launched Didi Waimai. That service was eventually suspended after a protracted price war with Meituan. Now, Didi is trying again.

• The company launched a new home delivery service called “Paotui,” meaning “running errands” in Chinese, in 21 domestic cities during the Covid-19 outbreak earlier this year.
• The majority of drivers from Didi’s chauffeur service—which previously employed more than 100,000 drivers—have varied their roles since March, either by delivering groceries or picking up laundry, according to Latepost. At the time, a Didi employee told Chinese media that the company would wait to see market reaction before deciding whether to make an all-out push.
• However, in the company’s latest growth plan the priority of the grocery delivery business has reportedly (in Chinese) been downplayed. Didi has struggled to get traction, with some couriers securing only two orders a day, Chinese media reported. In contrast, the order volume of Meituan’s grocery delivery business surpassed 1 million per day as of May.
• Didi declined to reveal the order volume of its home delivery service, known as “Paotui” in Chinese, but said that its grocery delivery platform “Chengxin Youxuan” completes more than 550,000 orders per day in three cities in China’s southwestern Sichuan province.

Didi has sought to overhaul its app by adding a raft of new services in an ambitious bid to make it an all-in-one app for various mobility demands. But Didi’s approach has been met with skepticism. Industry insiders question whether subsidies can work in a market like intra-city delivery, where users place orders less frequently than hailing a cab.

Didi goes global

Third, Didi has stepped up efforts to expand its international footprint, intensifying competition with US rival Uber. Didi so far operates in nine countries including Brazil, Mexico, Australia, and Japan—all of which Uber is already established in. Uber has already pushed its way into 65 nations around the globe, and more than 40% of the US company’s revenue now comes from international markets.

Having seen mixed results across countries, the company is promising a fivefold increase in overseas order volume over the next three years—requiring massive investments to scale.

• Didi plans to reach 5 billion orders annually by the end of 2022, including bookings on its ride-hailing and food delivery services.
• The company last year hit a major milestone, completing 1 billion trips across rides and deliveries from 50 million overseas users. Daily trips on its ride-hailing platform reached a peak of 5 million globally, but averaged at 3 million in 2019.
• Didi’s overseas business was hit hard by the pandemic this year, with order volume down by 20% from pre-pandemic levels, according to Chinese media LatePost.
• A Didi spokesperson told TechNode on Friday said its international markets have started to recover in the past three months, with Brazil and Mexico now “very close to pre-COVID levels.”

Betting on new markets: In its fight with Uber, Didi has sought out key markets to drive its expansion. Latin America is expected to be a battleground for ride-hailing platforms, as a populous area without anefficient public transit systems. Market research company Statista estimates the ride-sharing revenue of the region will surpass $1 billion by 2023.

• Didi saw initial success in Mexico after entering the country in 2018, grabbing around 30% market share in cities including Mexico City, the nation’s capital, and Monterrey.
• Some analysts are positive about Didi’s international prospects. A Pitchbook analyst told the SCMP that Didi has an edge because it takes more tailored approaches to entering different markets, while Uber’s strategy is more one-size-fits-all.
• Didi also made a foray into Russia last month—where it does not compete with Uber, but faces homegrown Yandex Taxi—and is expanding its reach in Australia, but this progress could come at a high price.
• A Didi spokesperson told Business Insider that its ride-hailing service was up to 10% cheaper than other ones in Australia. Uber has long ruled the country’s roads after eight years of operation.
• Also, Didi recently scaled back efforts in Japan by suspending services in ten prefectures, facing major headwinds from both the pandemic and stringent regulations, reported Nikkei. Ride-sharing using private cars is currently forbidden in Japan, forcing Didi to focus on taxi-hailing services.
• A Didi spokesperson told TechNode that is expanding rapidly, adding that it is now recruiting drivers in New Zealand and is ready to launch in more Latin American countries by the end of this year.

As it heads for an IPO, Didi aims to challenge Uber as the world leader of transportation by expanding in the overseas market. While the company boasts a more tailored approach to individual countries than Uber, it faces regulations as varied as the counties in which it operates. As its home market slows, its global business is expected to drive growth.

The future

Didi has ruled China’s ride-hailing market for years, but has never enjoyed a secure position in its home market, as a result of challenges from numerous smaller players. Now, the company faces its biggest trial yet—justifying a valuation of at least $56 billion ahead of a much-anticipated IPO, while competing with Uber for dominance in the global ride-hailing market.

Didi said it is encouraged by its “strong results so far and remains confident” about achieving its three-year target. “Globally, we see definitely more demand for affordable, safer, and more diversified on-demand services post-COVID,” a spokesperson said.

Didi will likely further expand its dominance in China’s mobility market—but the cost will be huge. As mobility services continue to grapple with the lingering effects of the post-Covid-19 era, Didi could face more bumps on its road toward capital markets.

Correction: An earlier version of this article incorrectly cited figures from Chinese media relating to the number of van drivers Didi hired at the launch of its intra-city logistics service. Additionally, the story misquoted a Didi spokesperson regarding order volume on the company’s home delivery service.

Ye Jieping, the head of Didi Chuxing’s artificial intelligence research team, is stepping down after five years in the role as the Chinese ride-hailing platform sharpens focus on sustainable growth and profitability.

Why it matters: Ye is the latest in a series of departures from Didi this year. The country’s biggest ride-share app is streamlining its businesses to focus on revenue growth and efficiency, and scaling back on non-core projects.

• Didi was hit hard during the Covid-19 outbreak, and it is seeking out new revenue streams such as logistics and grocery deliveries. Didi president Jean Liu in May said its ride volume had recovered to 60% to 70% of pre-Covid levels in an interview with CNBC.

Details: Didi chief technology officer Zhang Bo is taking over to lead AI Labs, a team of around 200 scientists and engineers, from departing director Ye, Chinese media reported Monday citing people familiar to the matter.

• A fellow of the Institute of Electrical and Electronics Engineers (IEEE) and an associate professor at the University of Michigan, Ye joined Didi in 2015 when the company was in urgent need of top-tier AI talent in its head-to-head competition with Uber China.
• The AI academic led the deployment of machine-learning algorithms to manage dispatching vehicles on Didi’s ride-hailing platform to improve demand forecasts.
• Ye was named a deputy head of Didi Research Institute in April 2016, months before Didi merged with Uber China. Its oversight of AI Labs, which focuses on developing AI use cases for urban mobility services, came two years later.
• In an announcement sent to TechNode on Tuesday, Didi thanked Ye for his service to the company, saying that his work helped DiDi “break many new trails in AI application to transportation.”
• China’s ambition for wide AI applications has been hindered by security issues and a lack of high-quality data, among other challenges, according to a SCMP report, with scientists returning to academia from roles with local tech giants.

Contexts: Rumors linked Ye’s departure with the recent shift in positioning AI Labs as engineering-driven rather than research-led. Previously, the company’s new growth goals for the next three years triggered a series of management departures.

• Tiger Qie, a former Google scientist and the CTO of Didi’s ride-hailing business, recently left the company after being assigned to lead research collaboration earlier this year, Chinese media LatePost last month reported citing people familiar with the matter.
• Other executives who had left the company this year include Fu Junhua, senior vice president overseeing Didi’s public transport services; Tony Qiu, COO of its global business group; and Jia Zhaoyin, chief architect of the self-driving business.
• As it prepares for a potential listing in Hong Kong, the Chinese ride-hailing giant has reportedly refreshed its core values in recent months, calling for greater responsiveness to change.

China’s biggest ride-hailing platform Didi Chuxing said on Tuesday that it has launched ride-hailing services in the Tatarstan Republic, part of the Russian Federation, as it resumes its global expansion following the onset of the Covid-19 pandemic.

Why it matters: This marks Didi’s first expansion into the European market after concentrating global expansion efforts in South America over the past three years. Overseas expansion is a key driver for its business growth given slowing momentum in its domestic market.

Details: Didi has launched a ride-hailing service in Kazan, the capital city of the Tatarstan Republic, through partnerships with local commercial fleets and hiring self-employed drivers, a company spokeswoman said on Wednesday.

• Driver recruitment started in late July, according to an announcement. It did not disclose its local partners or the size of its fleet.
• Didi began searching this year for local talent across Russia, including in St. Petersburg, Russian media reported citing persons familiar with the matter, and is looking to expand operations to cities including Moscow and Yekaterinburg by year-end.
• The ride-hailing giant is reportedly (in Chinese) taking an aggressive approach, undercutting rivals with a low commission rate of 5% during the launch period starting late July, compared with the average 15% to 20% in the Russian market. Didi declined to reveal further details about the launch campaign.
• Chinese companies are well-known for their aggressive pricing policies, according to Anatoly Smorgonskiy, the Russia head of Israeli mobility startup Gett, who spoke with TechNode on Wednesday.
• He expects that Didi’s launch in Russia will lead to increased competition in the market over the medium term, and small local players will leave or consolidate.
• Didi will go head-to-head with its archrival Uber, which in early 2018 formed a ride-hailing joint venture with Yandex.Taxi, a subsidiary of the country’s search engine giant Yandex, through a merger, according to a Reuters report.
• “Russia is a large market for taxi services… but the competition is also quite high,” said Viktor Dima, senior analyst at Russian investment company Aton. Moscow-based Aton has been a Didi investor since 2019.  
• Given the pool of well-established players in the market, Didi’s success in Russia may depend on how much it intends to invest. “We should not exclude that Didi will probably have to partner with one of the local majors, just as Uber did with Yandex,” Dima said.
• Sovereign wealth fund, Russian Direct Investment Fund (RDIF), is a Didi investor. RDIF’s CEO Kirill Dmitriev told CNBC earlier this year that it was looking at the Russian market with Didi.
• Analysts view Russia to be among the most dynamic ride-hailing markets in the world, due to the poor public transportation infrastructure in a vast territory, Russian financial newspaper Kommersant reported last July based on an HSBC study.
• Tatarstan Republic is one of Russia’s most economically developed regions. Didi’s senior vice president Stephen Zhu said a better and safer ride-hailing service will help rebuild the post-pandemic local economy.  

Context: Didi is accelerating its overseas expansion. The company set ambitious global targets including 100 million daily trips and 800 million monthly active users as part of its three-year growth plan.

• CEO Cheng Wei in April said Didi had clocked more than 1 billion rides in overseas markets as of early this year. It has operations in nine countries including Mexico, Costa Rica, Australia, and Japan.
• The company marched into Latin America with a $100 million investment in Brazil-based taxi on-demand service 99 in early 2017, followed by a $1 billion acquisition one year later.
• In 2017, Didi invested in an Estonia-based ride-hailing startup, Bolt, but its presence in the Russian ride-sharing market is barely noticeable, according to Smorgonskiy.

Updated: The story was updated on Aug. 28 to include Didi’s response on the commission rate and comments from Anatoly Smorgonskiy of Gett and Viktor Dima of Aton. 

App of the year: Health code

Who’d have thought the app of apps, the one that defines 2020 in China would be web-based? Now in most Chinese cities, QR code-scan checkpoints are at the entrances of just about everywhere you go. There’s no getting through an ordinary day in China without filling in your information and travel history to get a green code.

Alibaba pioneered the health code idea and implemented it in Hangzhou—where its headquarters is based—on Feb. 11. Luckily, based on TechNode’s findings, it seems like the health code system won’t collect more information than what Facebook can get from you. The new normal is quite easy, with only an extra scan.

Communicate: Wechat

There’s a million reasons to hate Wechat: it limits your individual conversations and its group chat system is a mess, the Moments news feed is full of braggarts and fake news. Worst of all, since everyone uses it to chat with both friends and colleagues, it upsets the work-life balance. And don’t forget how it “helps” at work, like when it removes the shared file you want after just a few days without notice, or when you accidentally nudge your boss in a work group. Yet it’s still the number one app you need in China.

If you are a minimalist, there’s only one app for a fulfilled China life. This is it.

English support: Yes

Download: App Store, Google Play

Pay for stuff: Alipay / Wechat Pay (via WeChat)

To many expats, Alipay is Paypal on steroids. Most importantly, it’s the key to Taobao, China’s dominant online marketplace.

Traditionally, Alipay has required a local bank account. But last year, the platform opened to tourists in a Tour Pass program, which allows short-term visitors to register a prepaid card service and make cashless payments in Chinese yuan. However, the pass has some restrictions, like a required minimum and mandated maximum top-up amount.

Wechat also announced a partnership with Visa to deploy international card support to Wechat Pay one day after Alipay Tour Pass’s launch.

English support: Partial

Download: App Store, Google Play

Buy anything you could want: Taobao / JD.com / Pinduoduo

In terms of getting what you want, Taobao is the first place most people look. Even the Chinese professional basketball league bought their MVP trophy via Taobao.

JD.com is best known for its fast, reliable shipping and guaranteed authentic goods. Thanks to their in-house delivery network, JD Logistics, an order placed by 11:00 a.m. can be fulfilled the same day in most big Chinese cities.

A bargain-hunter’s paradise, Pinduoduo targets tier-two and -three cities and rural areas within China with affordable unbranded and white label goods using a disruptive social e-commerce business model. Despite its reputation as a counterfeit mall, Pinduoduo has somehow managed to become the “Apple MSRP killer”—every time Apple releases new products, Pinduoduo lists them with a discount. Last year, Pinduoduo chairman and founder Huang Zheng told the press that it sold “over 400,000 latest iPhone models” during the first 11 days of November 2019.

English support: No

Download: App Store (Taobao, JD, Pinduoduo), Google Play (Taobao, JD)

Get food (meals or groceries): Eleme / Meituan / Freshippo / JD Daojia

During the pandemic, local delivery services have become even more essential. Alibaba-controlled Eleme and Tencent-backed Meituan are two of the biggest service platforms which help users—from buying groceries to restaurant meal deliveries.

The grocery leaders are Freshippo, Alibaba’s supermarket brand, and JD’s Daojia. Freshippo, known as Hema in China, offers quality goods sent directly from its brick-and-mortar grocery stores without shipping fees (capped at one order per day). Daojia brought conventional supermarkets and local vegetable markets online, and linked them with a crowdsourced low-cost delivery network.

Back in 2018, Freshippo changed the game entirely, allowing flexible shopping options from mobile ordering and cashless self-checkout to home deliveries or in-person dining.

English support: No

Download: App Store (Eleme, Meituan, Freshippo, JD Daojia), Google Play (Meituan)

Watch videos: Douyin / Bilibili / Kuaishou / Tencent Video / Iqiyi / Youku

Over the last few years, Douyin has become one of China’s most influential social networks, with loyal fans ranging from college students to the elderly (like my mom). Tiktok’s domestic version, Douyin offers you a window into Chinese people’s lives, and a chance to see propaganda developing from street banners to viral dance moves and rap songs.

Bilibili was originally known for its anime, comics, and game (ACG) content, but it has expanded widely into more mainstream offerings. Now the video platform has reached 172 million monthly active users (MAUs) and an average daily time spent of 87 minutes per user.

Kuaishou is also a short video service with a large user base outside of China’s tier-one cities. On it users can find lots of Jackass-style content generally associated with rural dwellers similar to the now famous alcohol-chugging Hebei Pangzai.

Iqiyi, Youku, and Tencent Video are China’s three big video-on-demand platforms. These are where fans of Chinese-made TV series go to watch their dramas. Spoiler alert: the “Game of Thrones” finale is still being transferred to Tencent Video’s servers.

English support: No

Download: App Store (Douyin, Bilibili, Kuaishou, Tencent Video, Iqiyi, Youku), Google Play (Bilibili, Tencent Video, Iqiyi, Youku)

Listen to music: Xiami / QQ Music / Netease Music

Some say that your taste in music reveals your personality—and in China, so does your taste in music-streaming apps. China’s indie music fans prefer Netease Music, while QQ Music pleases the mainstream as it offers the biggest licensed library compared with its competitors. In between lies Alibaba’s Xiami, which once referred to a free premium trial offer as a promotion for “beggars,” sparking a netizen backlash.

One drawback of Chinese music apps: you may find some iconic musicians missing from your local music app’s search results, perhaps because of politics, or simply because they sport too many tattoos. But the good news is that Apple Music and Spotify Premium are both accessible in China.

English support: No

Download: App Store (QQ Music, Xiami, Netease), no Google Play links—look on Chinese Android app stores

Call a car: Didi / Amap

In China, ride-hailing and mapping services are all following the same GPS route. Alibaba’s Amap is an aggregator which hails cars through six ride-hailing services (including industry giant Didi, and it will soon include robotaxi services) and offers a price comparison function. The Uber-like Didi has been expanding its product line so you can now rent a car, find a gas station, and get turn-by-turn directions without leaving the app.

English support: Amap (no), Didi (partial)

Download: App Store (Didi, Amap), Google Play (Didi, Amap)

Rent a bike: Didi / Hellobike (via Alipay, Amap) / Meituan

If you visited China a few years ago, you have probably noticed the colors of Chinese rental bikes have changed. What’s also changed are the apps that unlock those bikes. The Wechat-opens-all era is long gone. You need at least three apps in order to unlock all the major bikes: Wechat or Didi for the turquoise Didi bike; Meituan for the yellow; and Alipay for the blue.

Although Mobike once was one of Wechat’s most used mini-programs with 40 million monthly active users, this mini app was pulled after Meituan’s acquisition of the company.

English support: No

Download: App Store (Didi, Alipay, Meituan), Google Play (Didi, Alipay, Meituan)

Find your way: Amap / Baidu Maps / Apple Maps

In China, Google Maps doesn’t work because the app is blocked by the Great Firewall along with other Google apps, and also because its Chinese street maps are outdated by three to four years. This gets you nowhere in a country that changes at the blink of an eye.

Alibaba’s Amap and Baidu Maps are the two biggest players in China’s map service sector, both featuring a clean interface and handy functions such as real‑time transit information and street views.

For English users, though, Apple Maps is a better choice—it is basically an English version of Amap.

English support: No

Download: App Store (Amap, Baidu Maps), Google Play (Amap, Baidu Maps)

Find new restaurants: Dazhong Dianping / Koubei (via Alipay)

Yelp is not available in China, but Meituan’s Dazhong Dianping and Alibaba’s Koubei are. Both apps help users find restaurants, businesses, and services based on your location. Established in 2003, Dianping has built a massive database on your surroundings; Koubei has been catching up since Alibaba and Ant in 2015 poured nearly $1 billion into this startup to tap China’s local services market.

Both apps are in Chinese only, but English users can use Apple Maps to access Dianping’s data, thanks to a collaboration in place since 2015.

English support: No

Download: App Store (Dianping, Alipay), Google Play (Dianping, Alipay)

Being understood: Pleco / Baidu Translate / Youdao Translator / DeepL

The beloved Pleco aside, China’s own translation services have exploded in recent years. Baidu, Netease’s Youdao, and Iflytek have all significantly improved translation quality, and European DeepL has also made a major breakthrough in context interpretations, making it easier to understand one another’s languages now. (Avoid WeChat’s in-app translation.)

Download: App Store (Pleco, Baidu Translate, Youdao Translator), Google Play (Pleco, Youdao Translator), Web (DeepL)

China’s Didi Chuxing is in the early stages of preparation for an initial public offering in Hong Kong, three sources close to the matter told TechNode on Wednesday, confirming reports in Chinese media.

Why it matters: Didi is the latest Chinese tech behemoth to push ahead with a multi-billion dollar initial or secondary listing in Hong Kong since Alibaba started the trend in with a November 2019 secondary listing. Chinese companies increasingly favor the Hong Kong markets, due in part to the increasingly strained relationship between China and the US.

READ MORE: As China tech stocks surge, a fundraising window opens

Details: Didi is seeking to hire investment banks to advise on a potential IPO in Hong Kong, said people familiar with the matter. They added that changes could occur in details of the plan, since deliberations are at an early stage. TechNode’s sources did not comment on the company’s valuation.

• A company spokesman on Wednesday told TechNode that an IPO was not the company’s “top priority,” and that it did not have such plans for the moment.
• News first broke on Monday that Didi was seeking a public listing at a target valuation of up to HKD 600 billion ($80 billion) in the Hong Kong stock market, according to a Chinese media report.
• On Tuesday, Caixin also reported (in Chinese) that Didi was proceeding a Hong Kong listing plan, adding that institutional investors had requested a chance to exit through an IPO.
• Caixin cast doubt upon the $80 billion figure, writing that the company is currently valued at around $56 billion. Citing an early investor in the company, Caixin wrote that recent harsh regulatory scrutiny from the Chinese authorities will make the $80 billion figure unlikely.

Context: After a difficult year, during which its business was hit first by public outrage over two customers murdered by Didi drivers, and then by the global Covid-19 outbreak, Didi is now looking to make up for losses in core businesses while diversifying its revenue in a bid to boost its valuation.

• Didi has been piloting a home delivery business in over 20 domestic cities since March, but is reportedly (in Chinese) struggling to take market share from industry giants such as Meituan and JD.
• The Chinese ride-hailing giant is also pushing into the freight logistics industry with the launch of a pilot service in the eastern city of Hangzhou and Chengdu, the capital of southwestern Sichuan province, late last month.
• Around 8,000 van drivers were recruited for the freight service, and more than 10,000 orders were secured, in its first day of operation, the company said.
• Speaking on a Bloomberg TV show in April, Didi president Jean Liu said the company has no “specific IPO timetable.”

Correction: An earlier version of this article incorrectly quoted comments by Didi President Jean Liu from an interview with Bloomberg.

Chinese ride-hailing platform Didi Chuxing on Monday suspended inter-city transport to and from Beijing only weeks after the service resumed in late May, as the capital banned inter-city ride-hailing amid rising Covid-19 cases.

Why it matters: Didi’s recent move is the latest to stem a second wave of coronavirus infections in Beijing. A rollback in the demand for urban transit including ride-hailing is expected, as authorities re-impose strict bans on travel and public events.

• Chinese mobility services including Alibaba’s online mapper Autonavi, Hellobike, and Nio-backed Dida have taken similar moves at the request of local regulators.
• Local health authorities reported 31 newly identified coronavirus cases for June 16, bringing the accumulated number of infections since Thursday to 137. Total cases have reached 557 as of Tuesday, reported CGTN.

Details: Beijing Municipal Commission of Transport on Monday issued a notice to local ride-hailing platforms to halt inter-city operations immediately, without revealing a date to resume operation.

• A Didi spokeswoman said the company has suspended the services in response to the government, while passenger transport within the national capital, including Express and carpooling service Hitch remain in operation.
• The suspension came after only a few days of resuming as the city’s public transit system “returned to normal,” which means vehicles, buses, and metros could be fully loaded beginning on June 1, according to a government notice (in Chinese).
• Previously, Didi’s inter-city services to and from Beijing had ground to a halt for months since late January when coronavirus cases started climbing across China.

READ MORE: Didi has resumed late night hours for carpooling service Hitch

Context: The Beijing municipal government on late Tuesday announced it has raised its emergency response level from three to two, re-imposing measures that forbid public gatherings and shut school, as well as applying strict travel restrictions to local residents. The load factor for the city’s public transit was lowered from 100% to 75%.

• The global mobility-as-a-service market has been hit hard due to the Covid-19 outbreak, with market value expected to reach $69 billion this year, a 39% slash from pre-Covid estimates, consultancy AlixPartners wrote in a recent report.
• Didi also reportedly suspended ride-hailing services in at least more than 20 domestic cities and counties, including Wuhan, in late January.
• In mid-February, ride-hailing platforms took a series of measures in an effort to resume operation, including installing protective plastic sheets in taxis, daily temperature checks for drivers, and regular vehicle disinfection.
• China’s Ministry of Transport in early April said all domestic cities and counties from 31 Chinese provinces have fully resumed road public transit. Didi restarted ride-hailing services in Wuhan, the central Chinese city at the heart of the coronavirus pandemic on April 30, ending its three-month stoppage.

Correction: an earlier version of this story incorrectly stated that Didi suspended its inter-city service to and from Beijing only a week after resumption in late May. It should have read “only weeks.”

Ride-hailing platform Didi Chuxing is piloting a new grocery e-commerce project in Chengdu as it looks to diversify its revenue streams.

Why it matters: The e-commerce pilot is Didi’s latest push to expand beyond its core ride-hailing business, which has been hit hard by the Covid-19 epidemic.

• Grocery e-commerce was one of the few business segments that saw strong demand during the coronavirus outbreak.
• Entering the market means the company will be competing in a cutthroat industry against grocery delivery giants ranging from Meituan to JD Daojia.

Details: Chengxin Youxuan is a fresh produce and grocery “community e-commerce platform” for shoppers who live within a certain vicinity of one another, local media reported.

• Users can access the service through a WeChat mini-program, which offers flash sales of daily groceries and basic supplies including vegetables, fruits, paper products, and snacks.
• Without a courier fleet, the service only supports next-day pick-up at nearby offline stores, putting it at a disadvantage compared with grocery delivery rivals.
• Didi is operating the service through partnerships with third-party warehouses and stores.
• The service is currently active for residents in Chengdu, which has lower operating costs and less competition compared with megacities like Beijing and Shanghai.
• The company on Tuesday confirmed to TechNode that the project is under small-scale pilot testing, calling it “one of Didi’s new efforts to address the new demand of users in the post-Covid-19 era.”

Context: The company in March launched home delivery service “Paotui,” where users can request couriers to run errands, from picking up laundry to delivering groceries.

• Didi is also began hiring van drivers in May in two provincial capitals as part of an early-stage move into the logistics industry.
• The “community e-commerce” concept isn’t new but gained traction during the Covid-19 lockdown.
• The company sells to shoppers who live within the same communities to save on distribution costs, helping to keep prices low. Shoppers can also band together for group buys.

Didi Chuxing, China’s largest ride-hailing company, is hiring van drivers in two provincial capitals as part of its early push into logistics. This is the latest move into more general mobility services like home delivery and public transit.

Why it matters: Didi’s push to establish itself in the wider mobility market may drive the company’s valuation even higher, but the competition with existing players ranging from Meituan to freight service giant Manbang Group will be intense.

• Also backed by SoftBank’s Vision Fund, Manbang has been the largest player since early 2018 when the company claimed 5.2 million out of China’s total 7 million truckers as part of its league of registered freighters.

Details: Didi on Monday started recruiting van drivers for its intra-city freight delivery pilot project in the eastern Chinese city of Hangzhou, and Chengdu, the capital of the southwestern Sichuan province, according to a job posting on Didi’s official account on Chinese popular instant messaging platform Wechat.

• Didi said that an undisclosed amount of commission fee will be waived to around 600 early freighters for the first 30 days.
• Currently only those who own vehicles, from mini pickups to moving vans, are being considered. A deposit of RMB 800 and a fee of RMB 50 for on-van marketing are required for each driver.
• Didi has already invested RMB 100 million ($14 million) as registered capital in two cargo delivery and packaging companies each.
• Zhao Hui, general manager of Didi’s chauffeuring business unit is the legal representative of the two companies, according to information on Chinese business research platform Tianyancha.com.
• Two local logistics companies are responsible for hiring and training drivers on behalf of Didi, according to a Chinese media report.
• Didi did not respond to a request for comment.

Context: Didi has been expanding its presence with a goal of becoming a “one-stop mobility platform” offering 100 million daily trips with 800 million monthly active users globally over the next three years.

• Already China’s largest ride-hailing platform, Didi is doubling down on bike rentals, public bus services, and home delivery, seeking new growth engines in a more general mobility market.
• The company is reportedly struggling, however, to get new users in these new businesses.
• Chinese media last month reported couriers sometimes only drove about 20 kilometers (13 miles) for taking two orders a day on Didi platform, while they estimated a bottom line of driving 100 kilometers per day to make a living.
• In an interview with CNBC, Didi president Jean Liu said the company currently has neither restructuring nor funding plans given “a very strong balance sheet.”

Chinese ride-hailing platform Didi Chuxing has reportedly secured a $1 billion round of fresh funding for its bike rental business Qingju, as the company seeks to diversify growth in the Chinese mobility market with a target of 100 million daily trips for the next three years. People familiar with the deal told LatePost (in Chinese) that Didi poached part of the investment away from Ant Financial’s Hellobike.

Why it matters: Already the biggest ride-hailing platform in its home country, Didi is digging a wide yet deep competitive moat around the broader Chinese mobility market. The company sees bike rentals as one of its main growth drivers.

• Didi on Friday announced it has shifted focus for a new round of growth from an “all-in-safety” strategy, with a list of goals called “188.” It refers to more than 100 million daily trips and 800 million monthly active users (MAUs) globally, and 8% penetration rate in the mobility market over the next three years, according to an announcement.

Details: Investors in the round include Lenovo-backed investment firm Legend Capital and an unnamed international venture capital firm, according to LatePost.

• LatePost added the overseas capital fund, whose name was not revealed, initially planned to invest in Ant Financial-backed Hellobike, but was later won over by Didi.
• In an announcement sent to TechNode on Monday, Li Kaizhu, co-founder of Hellobike said the recent funding to Qingju will not have a big impact on the market landscape. “[We] are acquiring shares respectively in a growth market,” Li added.
• Didi is now planning to further boost its growth at home and abroad, with goals of becoming a “one-stop mobility platform” offering two-wheeler (bike and electric bike) and public transport services, it wrote in an earlier announcement.
• Two-wheelers will take a large proportion of the company’s goal to achieve 100 million daily trips, LatePost reported citing an insider, who added the company is expanding the reach in Chinese lower-tier cities while improving efficiency and exploring revenue streams.
• Didi declined to comment. Legend Capital did not respond to a request for comment.

Context: Chinese bike rental services have struggled to break even and the recent cash infusion is expected to bring changes to the market.

• Qingju was incubated in-house and started operations in early 2018 after Didi was rumored to have tried and failed to acquire erstwhile star company Ofo. Qingju has been under the company’s two-wheeler business group along with Jietu, a motor scooter rental platform since mid-last year.
• Hellobike is currently the biggest market player with half of the market share since April 2018, Li Kaizhu told Bloomberg early last year. The company earlier this month said it had closed an RMB 200 million ($28 million) round from Shenzhen-listed electric product maker Hangzhou Zhongheng Electric to build charging piles for electric bikes.
• Hellobikes user base declined 11.5% month-on-month to 3.17 million monthly active users as of January, followed by Mobike with 2.8 million MAUs, according to recent figures from Chinese mobile internet research firm Trustdata (in Chinese).

Ride-hailing giant Didi has resumed limited nighttime operations of its carpooling service Hitch in some cities across China, while implementing stricter identity checks for drivers and passengers.

Why it matters: Didi suspended Hitch indefinitely in 2018 following two separate incidents in which drivers on the platform raped and murdered their female passengers.

• The murders sparked public outrage, prompting regulators to launch an industry-wide crackdown aimed at improving safety in the ride-hailing sector.
• Didi relaunched the service in November, though passengers could only hail rides between 5 a.m. and 8 p.m.

Details: Passengers in cities including Beijing, Shanghai, and Hangzhou will now be able to use Hitch until 11 p.m., Didi said in a post on microblogging platform Weibo on Friday.

• The late-night service comes with heightened safety measures, including more frequent identity checks, improved ability to detect route abnormalities, and more stringent trip recording requirements for drivers.
• Only passengers and drivers who have verified their identities on the platform, have not received any safety complaints in the past year, and have taken Didi’s nighttime safety exam will be permitted to use the late-night service, a Didi spokesperson told TechNode on Monday. For passengers, the exam takes the form of an online questionnaire.
• In November, the company relaunched Hitch in seven cities across China, including Beijing, eastern China’s Nantong and Changzhou, and the northern cities of Harbin and Taiyuan, among others.
• The reinstated service didn’t come without controversy. The service only allowed women to travel until 8 p.m., while for men the service extended to 11 p.m. Didi standardized the 8 p.m. cutoff for everyone following complaints that the gender-based hours were unfair.
• Hitch still appears to only be available for transport within urban areas. When requesting rides between cities in Didi’s app, TechNode found that the system said intercity trips are not currently available.

Context: China’s ride-hailing industry has faced compounding issues over the past two years. Apart from safety concerns, the Covid-19 outbreak as resulted in flagging demand since the beginning of the year.

• Didi removed more than 300,000 unqualified drivers from its platforms following the government crackdown on the industry in the wake of the murders.
• The company reportedly lost RMB 10.9 billion in 2018 as a result, as it sought to meet regulator demands and recruit drivers that met government requirements.

Chinese biggest ride-hailing platform Didi Chuxing is planning to expand its presence in public transport sector over the next three years outlined in a set of new growth targets, according to a Chinese media report.

Why it matters: Didi’s recent moves are a signal that it is refocusing on growth and profitability after tinkering with its safety policies after the murders of two passengers by Didi drivers in 2018.

• The ride-hailing platform urgently needs to turn a profit after losing money for the more than six years its business has been operating, including a reported RMB 10 billion ($1.48 billion) loss in 2018. It spun off its self-driving unit in August to share the heavy development costs with external investors.

Details: Didi on Tuesday informed employees about a series of targets for the next three years, including daily orders of more than 100 million and monthly active user base of 800 million globally, according to an internal letter obtained by Chinese media Late Post.

• Meanwhile, Didi said it is targeting an ambitious 8% penetration rate for the broader mobility market, including public transport like bus rides and private transport like ride-hailing.
• The Softbank-backed mobility platform is the leader in China’s ride-hailing industry with more than 27 million rides on average each day last year, far outpacing of its rivals. It has also been ramping up businesses in shared bikes and private chauffeurs, two major private transport segments.
• However, it has made little headway in public transport such as bus service, an area mainly controlled by local governments. A company insider told Late Post that a 8% penetration rate could be “challenging” given the company’s limited involvement in the market.

Context: Didi launched in July 2015 the “Didi Bus,” an on-demand shuttle bus service in Beijing and Shenzhen, according to TechCrunch. It then formed a RMB 16 million joint venture with state-owned Shenzhen Bus Group in March 2016.

• Armed with a massive trove of transport data processed in real time on cloud servers, the company said its services were more flexible and demand-responsive with peer-to-peer pick-up and one-stop rides, in contrast with the fixed routes and limited schedules provided by traditional bus operators.
• The initial target was wildly optimistic: expansion into more than 30 domestic cities with a budget of RMB 500 million by the end of 2015. However, riders from just a dozen or so cities so far have used the service, including residents of Qingdao in eastern Shandong province and Xi’an, capital of northwestern Shaanxi province.
• Didi did not respond to a request for a comment when contacted by TechNode on Wednesday.

Ride-hailing platform Didi Chuxing said on Monday it has worked with a state-backed industry group to create China’s first nationwide guidelines for ride-hailing platforms dealing to prevent transmission of Covid-19 during rides. The guidelines are closely based on measures Didi has already adopted, promoting a Didi model for safe ride-hailing that includes AI-based mask checks using open source software published by Didi.

Why it matters: The standards, coming at a time when China has brought outbreaks under control, could provide guidance to other platforms and countries now facing the deadly coronavirus outbreak.

• Hit hard by a nationwide halt due to the epidemic, Didi has introduced a series measures in an effort to return to business as usual, including installing plastic barriers in drivers’ cars, temperature checks, and vehicle disinfection.

Details: Didi, China’s biggest ride-hailing platform, plans to issue recommendations for ride hailing drivers and passengers to avoid and contain the pandemic, working with China Urban Public Transport Association (CUPTA) later this month, the company said in a post on its official WeChat account Monday (in Chinese).

• The guidelines suggest ride-hailing platforms adopt a variety of strict measures, including requiring masks for both riders and drivers, daily temperature checks for drivers, and regular disinfection and ventilation for vehicles.
• Didi drivers are now being checked for masks multiple times before and during working hours, while being exempted from penalties for cancelling rides if passengers refuse to wear masks.
• The company recently open-sourced an AI platform to detect mask wearing for free use.
• Installing of plastic sheets in vehicles is also recommended to help prevent the virus spreading through the air. In late February, Didi announced a RMB 100 million ($14.3 million) initiative to install barriers in ride-sharing cars across more than 200 domestic cities.
• Founded by a former minister of construction in early 1990s, CUPTA is an industry group for public transport services currently supervised by a working committee of the central government, according to its website.

Context: The global ride-hailing market is taking a hit from the coronavirus outbreak.

• Didi’s daily active user base shrank by more than half in February from a month earlier after China took serious containment and social distancing measures to slow the spread of virus, according to figures from Chinese research firm Aurora Mobile.
• Uber admitted for the first time earlier this month that the pandemic could result in a material decline in its number of platform users and disruption in its operations outside the US, according to an SEC filing.
• The US ride-hailing giant this week expanded its sick pay policy to all driver accounts suspended for services caused by public health measures against the outbreak, while drivers have asked to halt pooled rides to further ensure their safety, reported The Verge.

China’s biggest ride-hailing platform Didi Chuxing took a 32% stake in Hyundai Insurance China, according to a regulatory filing released Tuesday, ramping up with the move its prospects in the Chinese online insurance market.

Why it matters: The recent deal could help Didi widen its line of auto financial offerings and expand its footprint in the lucrative Chinese online insurance industry, which the country’s biggest technology firms are vying to enter.

• Didi gained with the sale not only the right to sell insurance but also to issue and price insurance products in the Korean insurer’s China operations, according to Chinese media reports citing industry insiders.

Details: The regulator recently approved the RMB 1.1 billion ($158 million) investment in Hyundai Insurance China, the total for four stakes going to Chinese investors, with Lenovo and Didi subsidiary Dirun Tianjin Technology taking the lions share.

• Didi and electronics company Lenovo each bought 32% of the Beijing-based insurer, and are now the second-largest shareholders after Hyundai Marine and Fire Insurance, which holds 33%, according to filings released Tuesday by China Banking and Insurance Regulatory Commission.
• The Hyundai subsidiary mainly operates property insurance, liability coverage, and cargo insurance, and was granted the permit to sell mandatory auto insurance by Chinese regulators in 2013.
• Didi’s move into the auto finance sector is not new. The company has been offering financial services such as insurance and car loans with partners for five years, and began issuing loans to ride-hailing drivers as of February 2018, according to a Chinese media report.
• The China mobility giant in late 2017 won an online payment license through the acquisition of a Shanghai-based fintech company 19Pay for RMB 300 million, reported Caixin.
• This was followed by the launch of several financial services including crowdfunding for critical illness protection in its ride-hailing app, and a car leasing and fleet management platform early last year.

Context: Chinese internet heavyweights including Alibaba and Tencent have all been jostling for a position in the country’s online insurance market.

• Alibaba and Tencent joined forces to establish China’s first online-only insurer Zhongan with the country’s second biggest insurer Pingan in 2013. Ant Financial had 16% stake of the company, followed by Tencent and Pingan’s 12.08% before the company listed on the Hong Kong stock market in 2017.
• Baidu in June 2016 forged an alliance with China Pacific Property Insurance with plans to form a joint venture for auto insurance products. The application for an insurance license became mired in the process, and the two companies abandoned the JV plan in October 2018.

China’s massive ride-hailing platform Didi Chuxing has introduced home delivery options to its app in two major cities amid the Covid-19 outbreak which has weighed heavily on its core mobility businesses.

Why it matters: As many Chinese citizens remain home-bound, Didi’s push into home delivery could expand the company’s existing revenue streams and offset the impact of the pandemic on its disrupted ride-hailing business.

• Didi’s daily active user base shrank 54% during the Spring Festival holiday from more than 15 million early January, recent figures from Chinese research firm Aurora Mobile showed.
• The number of daily rides on Didi Express, the company’s standard-level ride-hailing service, sank by more than four-fifths sequentially in some major Chinese second-tier cities in February, Chinese media reported citing company insiders.

Details: Didi has quietly launched earlier this week a home delivery service, “Paotui,” a word which means running errands. The service is active for dwellers in the southwestern Chinese city of Chengdu as well as Hangzhou, capital city of eastern Hangzhou province, Chinese media LatePost reported.

• Unlike food delivery services, Didi users can request couriers to run errands for more general door-to-door tasks from picking up laundry to delivering groceries, according to a TechNode reporter’s observations on Wednesday.
• Didi will typically charge users between RMB 12 and RMB 20 (around $1.70 to $2.90) within a distance of 10 kilometers (around six miles). An errand request which exceeds 10 kilometers will cost more than RMB 30.
• The company on Wednesday confirmed to TechNode that professional chauffeurs from its Designated Driver business are currently offering the service and it plans to roll out the trial business nationwide, though it did not reveal further details.
• The company’s Designated Driving service which offers chauffeurs to safely bring users home in their own vehicles, is reportedly one of the company’s few profit-making businesses other than its struggling carpool service. The Designated Driving service has a daily order volume of 380,000 on average, although it has been hit hard due to the coronavirus outbreak.
• A designated driver could earn around RMB 4,000 a month offering home delivery services, according to the LatePost report, which may help offset lost income from Didi’s ride-hailing services, and help the platform with driver retention rates.

Context: Didi made its first foray into the lifestyle services market with the launch of its food delivery service in a number of Chinese cities in March, 2018, partly a preemptive measure against Meituan which began trial operations of its ride-hailing services in early 2017.

• Didi put a halt to the business in China a year later, after two female passengers were killed by drivers on its platform in separate incidents in mid-2018. The company reportedly incurred an annual loss of RMB 11 billion for the year, and announced a 2,000 job cuts early last year.
• The Toyota and Soft Bank-backed ride-hailing platform is on track to launch food delivery service in Japan starting April, Reuters reported citing a representative.

Beijing regulatory agencies reprimanded ride-hailing platform Dida Chuxing for resuming inter-city services to and from Beijing as the current novel coronavirus outbreak lingers on.

Why it matters: The spread of the Covid-19 virus has drastically constrained business for Chinese ride-hailing platforms. Regulators halted the service in more than 50 cities after the outbreak.

• The number of daily active users for China’s biggest mobility service provider Didi Chuxing cratered during the Spring Festival holiday, more than halving on an annual basis between Jan. 20 to Feb. 13, according to the latest figures from Chinese research firm Aurora Mobile.  

Details: Beijing regulators reprimanded ride-hailing platform Dida for offering inter-city rides to and from the nation’s capital. Dida has since halted the service, according to a statement from the city’s Commission of Transport and obtained by Chinese media on Friday.

• Meanwhile, the Didi rival was fined RMB 150,000 (around $21,500) for running the service with unqualified drivers. China began requiring all ride-hailing vehicles and drivers register for specific permits in order to operate on Jan. 1, 2019.
• A notice from the Ministry of Transport followed a day later, which underlined government restrictions on all inter-city ride-hailing services to and from both Beijing and Wuhan.
• The government agency did not give a timeframe for the ban, and stressed that the safety and stability of Beijing has a direct bearing on the leadership of the central government, warning that the penalty would be severe to violators including removal from Chinese app stores.
• Dida did not respond to requests for comment on Monday.
• Toyota-backed Didi said it suspended inter-city rides in Beijing beginning Jan. 26, as required by the local government. It did not say when it would restart the service.

Context: Other than Beijing and Wuhan, the epicenter of the virus outbreak, local governments have started to ease limits on public transit to support the country’s millions of workers returning to work.

• The Ministry of Industry and Information Technology in mid-February called for more concerted efforts to support work resumption especially from internet-connected transport services and freight deliveries in order to restore traffic and maintain supplies.
• Ride-hailing has since reopened in a dozen Chinese cities including Xi’an, capital of northwestern Shaanxi province, and the southwestern municipality of Chongqing, according to a statement Dida released on Thursday.
• China’s second largest ride-hailing platform, Dida falls well behind Didi in size. It records upwards of 3.65 million rides per day, around one-tenth that of Didi, according to an investor document cited by Bloomberg early this year.
• Dida’s user base declined 8% sequentially to 5.19 million monthly active users (MAU) as of January. Its MAU count is about one-fifth the size of Didi’s, figures from Chinese mobile internet research firm Trustdata show.

Didi Chuxing, China’s biggest ride-hailing service platform, on Tuesday said it was launching a RMB 100 million initiative to install protective plastic sheets between driver and passenger seats to minimize the spread of the Covid-19 virus.

Why it matters: The program could help ease widespread fears among Chinese users, who have been avoiding public transportation including ride-hailing amid the outbreak, and assist the company with recouping some of its hugely disrupted business.

• The ride-hailing sector has been a vertical which has taken a significant hit from the recent Covid-19 outbreak on shrinking demand.
• A female driver from Geely’s ride-hailing service Caocao in the eastern Chinese city of Hangzhou said her earnings dropped by around four-fifths over the week-long Spring Festival holiday compared with the holiday season last year, reported Chinese media.
• Didi on Monday announced it was expanding its February lease payment waiver to all drivers with its 3,000 leasing partners nationwide.

Details: Didi is ramping up its response to the virus, investing an initial RMB 30 million ($4.3 million) to install protective plastic sheets in rise-sharing cars, the company said in an announcement released Tuesday.

• Didi said multiple medical experts have agreed that the protective sheeting will help prevent the spread of the disease via airborne droplets from infected individuals.
• The ride-hailing giant began piloting the initiative beginning Feb. 8 in a dozen cities including Wuhan, the center of the outbreak, and Zhengzhou, capital of central Henan province, and is now rolling it out nationally, as it has been “welcomed by both passengers and drivers.”
• Drivers can now buy plastic sheets themselves, install it according to direction provided in the Didi app, and request reimbursement from the platform. The reimbursement is about RMB 15 for the first installation, Didi said in the statement.
• The sheeting may need to be replaced from time to time, the company said, and it plans to invest a total of RMB 100 million to cover the costs for the initiative.

Context: Didi has implemented a series of measures to support Beijing’s efforts in controlling the epidemic.

• Drivers are not allowed to offer rides without wearing a mask. Other rules in place include daily temperature checks and regular vehicle disinfection, the company said.
• The ride-hailing platform has been providing transport services for more than 20,000 medical workers in six Chinese cities including Beijing and Shanghai, bearing the cost of the service during the outbreak.

China’s ride-hailing platform Didi Chuxing is facing a shortage of protective gear including garments and face masks as the company expands its service for medical workers in Beijing amid a growing coronavirus outbreak in the country.

Why it matters: Didi is one of many firms facing protective gear shortages during the coronavirus epidemic, compounding fears about a deepening economic slowdown and financial strain on enterprises.

Details: China’s largest ride-hailing platform Didi is now running low on protective supplies including garments, face masks, and digital thermometers, company president Jean Liu said in a post on Chinese microblogging platform Weibo on Thursday.

• The company needs supplies “in large volume” to sufficiently protect its drivers, who are now required to wear face masks while in service, Liu said.
• Didi reminded drivers that they were all required to wear masks before taking orders or else suspend service, in an announcement released Monday on the company’s official Weibo account.
• The shortages are only affecting certain cities, according to the announcement, but the company declined to offer specifics when contacted by TechNode on Tuesday.
• In another announcement, Didi said it is offering transport services specifically for medical staff from two local hospitals—You’an and Ditan—in Beijing starting Tuesday by working with the city’s labor union.
• The expansion to Beijing follows similar measures in Wuhan and Shanghai implemented late last month.

Chinese tech firms ramp up support to battle outbreak

• On Jan. 26 the platform launched a feature allowing medical staff from three hospitals in Wuhan to hail cabs using its app after the city government banned most vehicles including private cars in the downtown area.
• The company claimed it has offered free transport services to more than 5,000 medical staff in Wuhan and 4,500 in Shanghai as of Feb. 2. Plans to roll out similar efforts for other cities are underway.
• Urged by the government, Didi recruited a total of 1,336 drivers in another move, offering free rides to local residents for non-coronavirus related medical emergencies and supply deliveries in Wuhan starting Jan.25.
• Didi is bearing the cost of the free rides services during the virus outbreak, a company spokesman told TechNode on Tuesday.

Context: In addition to offering free rides to medical workers, Didi has taken a series of measures to help contain the coronavirus outbreak as the impact causes widespread disruption to various business sectors in China.

• In an announcement released Monday, Didi said a total of 94 car leasing companies and 26 insurers have agreed to extend leases and waive February payments for drivers in 16 cities in Hubei province, an effort coordinated by Didi’s driver services division Xiaoju.
• It is also looking to scale up the program nationally with 3,000 leasing firms and dozens of insurance companies and financial institutions while offering a daily stipend of RMB 300 ($43) for Didi drivers infected with the virus.
• Didi suspended ride-hailing services in more than 20 local cities and counties other than Wuhan in a dozen of provinces since Jan. 26, as required by local governments, according to a notice obtained by Chinese media.
• As of writing, China reported 20,471 confirmed cases and 426 deaths, exceeding the death toll related to the SARS outbreak.

Updated: included information on mask requirements and shortages in Details section.

Caocao Mobility, the ride-hailing unit of Chinese automaker Geely, has offered transport services free of charge to residents and medical workers in the central Chinese city of Wuhan in response to Beijing’s call for companies to join the fight against the spread of the new coronavirus.

Why it matters: Caocao‘s service is expected to help solve residents needs, including helping the ill and medical staff shop for basics, see doctors, and commute.

• Wuhan’s local government banned non-essential motor vehicles from roads in the downtown areas in Wuhan on Jan. 26, trapping its 11 million residents in their homes after China locked the city down in late January.

Details: Chinese automaker Geely on Friday said that its ride-hailing service Caocao had established a special fleet equipped with more than 100 vehicles and 300 drivers to provide free mobility services for residents and medical workers in Wuhan.

• The fleet provides 24-hour service guided by a special dispatch team formed by local authorities, including transport for non-coronavirus related medical emergencies, as well as deliveries of food and medicine for residents in dozens of communities.
• Caocao’s fleet was part of the local government’s larger initiative recruiting a fleet of 6,000 vehicles to help citizens get around the city while preventing the spread of the virus, according to a report from Xinhua News Agency.
• The company said that the participation in the fleet was “completely voluntary” as many local drivers sought to “do their part” in defense of the home city.
• All the drivers were equipped with protective clothing, face masks, and disinfectant, the company said in an announcement. All of the vehicles are disinfected on a daily basis.

Context: Caocao is not the only company using the outbreak to burnish its image.

• Chinese biggest ride-hailing platform Didi Chuxing said in late January that it had set up an emergency fleet in which a total of 1,336 drivers were involved to serve Wuhan residents, immediately after the launch of the government initiative.
• Both Didi and Caocao shareholder Geely each announced separate funds of RMB 200 million ($28.38 million) to be put toward curbing the spread of the virus.
• China’s central government has subsidized virus-related workers with a daily allowance of RMB 200 per head, according to an announcement jointly released by the Ministry of Finance and the National Health Commission on Jan. 25.

The small city of Trikala, Greece offers some quintessential provincial scenes: bustling farmers’ markets with vibrant colors and old men with bushy mustaches chatting on park benches.

Delve deeper and you’ll discover public wifi, smart parking facilities, and coming soon, driverless buses. Trikala has become Greece’s first smart city thanks to the roll-out of multiple digital initiatives. With technology delivered straight from China, the city is set to commission (in Greek) the world’s first operational pilot for autonomous buses in real traffic conditions downtown.

Chinese state-owned vehicle manufacturer Weichai will provide the driverless buses which will operate for at least two years. This is the first time that China-made driverless vehicles will hit the roads in Europe.

The buses will automatically avoid obstacles and pedestrians and offer an on-demand service. They will provide customized options for passengers that deviate slightly from original routes to better serve their needs. 5G networks will support operations with lower latency and quicker connection speeds to the control center.

“There was great interest from European manufacturers. Weichai participated through a local subsidiary called Amani Swiss,” Odysseas Raptis, chief executive at e-Trikala, the company responsible for procurement, told TechNode. The most important factor was the technology and know-how of candidates, he said.

The project received funding from the Greek government and the European Union. The two governmental authorities handed out rounds of funding last summer and announced a procurement tender.

A team of five to seven engineers and experts from Weichai will accompany the driverless buses to the city for about nine months. During the first phase, the team will work with local engineers to map out a route. This phase is expected to last two to three months, Raptis said.

The driverless buses will then operate for six months while the Weichai team trains local staff. After that point, passenger operations will start and the program will run for an additional two years.

A team from Greece’s Institute of Communications and Computer Science from the National Technical University Department will also support the experiment, Raptis said.

“Globally, our program is synonymous with pioneering innovation,” said Yannis Kotoulas, president of e-Trikala told TechNode. “We will be able to see how passengers and people living with the experiment react to the buses,” he said, describing the partnership with Weichai as a “huge pleasure.”

Weichai Group is a Chinese state-owned corporation that specializes in the design and manufacture of diesel engines and vehicles. It has clients in 110 countries around the world, according to its website.

“We believe not only in this particular move, but in close collaboration with them [Weichai] to take steps that the global automotive market needs,” Raptis said, referring to the bypassing of obstacles and on-demand service.

Shanghai-based DeepBlue AI was also involved in the design and manufacturing of the vehicles, people familiar with the matter told TechNode.

If it wasn’t for a DeepBlue event in Athens last June, this deal may never have gone through. Trikala Mayor Dimitris Papastergiou told TechNode that it was after this promotional event that he informed DeepBlue of the tender.

Small city, big ambitions

Primarily agricultural with little industry in the heart of Greece’s biggest valley, Trikala had fallen on hard times competing with international product prices and volumes.

Over time, it became, at best, a stop over for tourists on the way to Meteora, a UNESCO world heritage site featuring monasteries built on towering rocks reaching 550meters in height. While tourists from Russia, the Balkans, and beyond continued to flock to the important religious landmark, Trikala’s economy was dwindling.

Technology offered the city not only an opportunity to better the lives of residents but also to nurture tourism and create jobs. Tours to Meteora now stop at Trikala to see the city’s smart infrastructure and try out the free public electric vehicles.

“We need to create our own opportunities and not wait for the state,” the mayor said. He said the municipality had submitted over 1,000 applications to international institutions for technology funds.

Trikala has gained a reputation on the European stage as the country’s first smart city. The Ministry of Economics and Finance named the city Greece’s first digital city in 2004. By 2009, it was listed in the world’s top 21 smart cities worldwide by the Intelligent Community Forum, a global network of smart communities.

The local municipality has integrated several intelligent features into the city’s infrastructure, including sensors on car parking spots, smart waste management and a pilot 5G network, one of three in the country. Chinese technology has been key to at least one of these, the engineers working on the project told TechNode.

The smart waste system was designed by local engineers and manufactured in China. The system monitors key pumps in the city’s waste pipes and alerts the control room if the pumps are under stress or in need of maintenance.

Without the option to manufacture cheap and quality hardware in China, implementing the system would have been far more difficult, the engineers said.

In 2015 and 2016, Trikala ran another driverless bus pilot funded by the European Union. Among the seven cities that participated in the project, Trikala was the only one to launch the project downtown. It served well as a tourist attraction, e-Trikala President Kotoulas said.

Results from the EU study showed that passengers at Trikala were unique in using the driverless bus regularly, as opposed to just out of curiosity. This data concurs with what local authorities told TechNode. The city’s residents are used to high tech applications and are proud to be part of a community that innovates.

The municipality anticipates further collaboration with Weichai in automated and sustainable mobility in the near future.

Chinese ride-hailing platform Dida Chuxing is seeking up to $300 million in pre-IPO funding from investors including Tencent, Chinese media reported Thursday.

Why it matters: Beijing-based Dida is the second-largest ride-hailing service in China and one of the few to say it is profitable.

• If able to raise the targeted amount, Dida is well-positioned to keep eroding Didi’s share of the market, which has been slowing along with the broader economy.

Details: Dida is looking to raise as much as $300 million in a last round of funding before filing for an initial public offering in the US, Chinese media reported Thursday citing people familiar with the matter.

• The company has been in talks with potential investors including Tencent with a pre-money valuation of $1 billion, the source said, adding that it is eyeing a US listing, though a date has not yet been set.
• The Didi rival expects to double the size of its business to 2 million orders per day this year. Currently around 70% of the traffic on its platform is for its carpooling service, which benefited from Didi’s nationwide suspension of its Hitch carpooling service following two passenger murders in 2018 by drivers. Dida’s carpool service increased tenfold in a year’s time as of mid-2019, according to the report.
• A spokeswoman from Dida Chuxing declined to comment when contacted by TechNode on Friday.
• Founded in 2014 by Song Zhongjie, a former HP executive, Dida provides taxi-hailing and carpooling services in 359 cities. Its user base of 5.64 million monthly active users (MAUs) as of December is one fifth the size of Didi’s, figures from Chinese mobile internet research firm Trustdata show.
• The company first claimed to be profitable in September, which it attributed primarily to its carpooling and value-added businesses including advertising, car maintenance, and auto insurance. A company executive said it charges RMB 1 to RMB 3 ($0.14 to $0.43) as a service fee from each carpooling order.
• Dida has so far recorded a total of four funding rounds including its latest, during which it raised an undisclosed amount from Nio Capital in March 2017.
• Its 2015 Series C raised $100 million, led by China Renaissance Capital Investment and followed by existing investors including Yiche, also known as BitAuto, a Nasdaq-listed auto information service provider formed by Nio founder William Li.
• Nio Capital is a mobility-focused venture capital firm formed by electric vehicle maker Nio, alongside Sequoia China and HillHouse Capital. Li has been the chairman of the Dida Chuxing board since 2018.

Context: China’s ride-hailing market has started to slow, reporting a 6.3% year-on-year decrease in total daily active usage in the third quarter of 2019, the fifth consecutive quarterly decline, analysts at Sanford C. Bernstein wrote in a report citing figures from Chinese research firm TalkingData.

• A reduction in user discounts and subsidies from ride-hailing platforms was the main driver for the decline, the report said.

Didi Chuxing unveils holiday measures to boost safety, car availability

Regulators released an update to rules governing the ride-hailing industry on Tuesday, including doing away with additional requirements for ride-hailing companies with foreign investment, and analysts say more regulation is to come.

Why it matters: The nullification of this requirement brings ride hailing in line with the Foreign Investment Law, which came into effect this year.

• Domestic companies have long enjoyed home advantages in ride hailing, creating enough of a competitive edge to sow doubt as to whether the change will lead to material change. “This announcement will not have a huge impact on industry, since we’ve already entered the second half of the game and there are already many players,” Xu Huxiong, principal at strategy firm Roland Berger, explained to TechNode.

Details: Regulators struck out a clause in regulations governing ride-hailing which required foreign-invested companies to contend with more red tape—such as additional permits and approvals—than domestic peers.

• The regulations (in Chinese), originally released in 2016, legitimized ride-hailing and also set standards for companies.
• State Council had already cut red tape for road transport service projects with foreign investment.

Local governments begin Foreign Investment Law rollout

Context: Regulations for ride-hailing continue to lag behind industry realities. The furor around Didi’s safety features following a series of incidents enabled by the ride-hailing platform, for example, highlight just one aspect of the challenge in regulating an industry with many small players, sometimes dozens in a single region.

• The speed at which the industry has developed leaves regulators struggling to keep up. “Governance of ride-hailing will become more detailed,” said Xu. There is already an alliance that consults with ride-hailing companies on regulations that will affect industry.
• Out of all of regulator priorities, “Safety is most discussed,” Xu said. That will mean operations become more standardized, vehicles may have cameras, and there will be more rules for different aspects of ride-hailing whether that be luxury cabs, or carpooling.
• Didi, one of the biggest players in ride-hailing, is already cooperating with local police in Guangdong to transfer evidence. It has been scrupulously adhering to requests, with some 98% of transfers (in Chinese) completed within 10 minutes.
• Whether platforms should be able to use location data to push tailored ads to users is also under debate, said Xu.

Didi Chuxing is rolling out a number of temporary measures aimed at ensuring an adequate number of cars on the road and passenger safety during the upcoming Spring Festival holiday, following meetings requested by Chinese authorities.

Why it matters: The latest requirements from authorities signal that Beijing is looking to tighten control over local ride-hailing platforms to improve security and broaden its availability to the public, which may drive mounting operating costs.

• In a recent announcement released by China’s Ministry of Transport, four central government departments on Monday warned ride-sharing platforms Didi and Nio founder William Li-backed Dida to guarantee driver supply and strengthen safety, especially for carpooling services, during the spring rush.

Details: To entice drivers to continue working through the holiday, Didi will impose a surcharge ranging from RMB 1 to RMB 9 (around $0.15 to $1.30) per trip during the two weeks starting Jan. 21. The surcharge will “go directly” to the driver, the company said in an announcement released Monday.

• Additional cash bonuses, in the form of red packets, will also be given to drivers in more than 280 domestic cities across China over the next three weeks to encourage them to work during the festival.
• The ride-hailing giant has poured money into such bonuses over the past three years, and in early 2018 spent RMB 1 billion ($158 million) on driver red packets for the holiday, according to a CGTN report. It has dropped mention of spending on Spring Festival bonuses since then.
• Meanwhile, Didi has established a “Holiday Season Safety Command Center” to operate for a 40-day period starting Jan. 10, the company said in a statement released Friday.
• Led by Didi CEO Cheng Wei and president Jean Liu, the interim working group will include team leaders, customer service team, and emergency management officers who will work on a 24-hour rotating shift schedule to handle urgent requests.
• As part of the initiative, Didi said it is looking into new ways to prevent safety issues especially for long road trips, including an artificial intelligence-powered driver fatigue detection system which alerts drivers with voice messages to take short breaks.

Didi to ask passengers to pay tips to drivers over Spring Festival

Context: Concerns about the safety issues on ride-hailing platforms have remained a public concern, with news headlines continuing to recall violent incidents inflicted on passengers.

• Chinese media reported in late October that a driver on transport platform Hellobike was arrested in the southern city of Foshan after allegedly threatening a female passenger with a knife for money.

Passengers aren’t buying a new Didi feature that trades privacy for safety.

Didi Chuxing is piloting mandatory audio recording as a safety feature during long rides on its Hitch service. Hitch is a carpooling service for private car owners and passengers going in the same direction.

Why it matters: Didi has been surrounded by controversy since the relaunch of its carpooling service Hitch in November. It is now struggling to reassure customers with a brand-new service with complex safety rules.

• The company earlier last month backtracked on its plans to impose gender-specific operating hours on the renewed Hitch. They replaced them with a standardized time slot from 5 a.m to 8 p.m for both men and women.
• The initial plan garnered accusations of gender bias. It was initially planned for the service to be available until 11 p.m. only for male passengers. Netizens decried this as setting a curfew on women.

Details: Didi expanded the relaunch of its carpooling service Hitch on Tuesday morning with the new safety feature in five Chinese major cities. The cities include Beijing, Wuhan, and Changsha.

• Most Hitch trips have an optional audio recording feature for both users and drivers.
• A ride longer than 30 kilometers (19 miles) total will automatically record audio from the drivers’ phone and can not be switched off, the company said in the user guide.
• After the first day in trial operation in Beijing, a number of local passengers refused to grant authorization. They were wary of the potential for eavesdropping on their private conversations.
• They added the measure helps to improve accountability but could not stop criminal activities per se, Chinese media reported citing some anonymous passengers.
• Didi claims all the audio recordings will be encrypted, retrieved in strict accordance to a set of rules, and “automatically deleted” after seven days if no disputes between rider and driver are reported.
• A Didi spokesperson told TechNode that customer agents never listen to recordings in real-time. Recordings are only accessible by Didi’s customer support team with the authorization from both customers and drivers, and by police with a proper legal mandate, the spokesperson added.

Context: Hitch was reportedly one of Didi’s only two products that had made a profit for a long time, alongside its high-end chauffeur-driven service.

• The Chinese mobility firm suspended the carpooling service following the murders of two female passengers by Didi Hitch drivers late last year, and recorded a staggering RMB 10.9 billion (roughly $1.48 billion) loss annually, according to an internal file obtained by Chinese media.
• Audio recordings were first used starting in September last year in Express and Premier rides as a required safety feature.
• The company launched the carpooling feature Pinche in 2015. Pinche offer rides from local ride-hailing fleets driven by drivers with government permits. Hitch drivers are private citizens not employed as drivers.

US chipmaker Nvidia has teamed up with Chinese ride-hailing giant Didi Chuxing to develop autonomous vehicles for a scalable ride-hailing service, as global companies join forces to accelerate autonomous car deployment.

Why it matters: Due to the immense amount of computing power needed for autonomous driving, automakers and mobility services have been seeking out partnerships with chip makers.

• The partnership echoes an earlier deal between Nvidia and Toyota, a major Didi backer, in which Toyota will use the chipmaker’s platform to test, validate, and deploy autonomous cars to the mass market.
• James Kuffner, chief of Toyota Research Institute-Advanced Development, told reporters on Tuesday that the company plans to first develop and deploy self-driving technologies in commercial vehicles for services including ride-hailing before producing highly autonomous passenger vehicles.

Details: Didi has selected Nvidia Drive, an end-to-end computing platform to develop, train, and validate its driverless technologies, Nvidia CEO Jensen Huang announced at its graphics processing unit (GPU) conference in the eastern Chinese city of Suzhou on Wednesday.

• Didi will enhance its autonomous driving technologies by using Nvidia’s platform to train deep neural networks, which powers a self-driving car with visuals of its surrounding environment and help it make decisions based on what it sees.
• The ride-hailing giant will also use Nvidia’s GPUs in the data center for training machine-learning algorithms, which the company uses for route planning more than 40 billion times each day.
• It follows an announcement Didi made in August of plans to launch a robotaxi service pilot with a fleet of 30 L4 self-driving vehicles in the outskirt of Shanghai early next year.
• The city government has yet to grant permission for a passenger transport program, people close to the matter told TechNode earlier this month.

Context: Robotaxis are seen as the most likely business application for self-driving technology given the high costs and strict regulations required to mass produce autonomous cars for personal use.

• Nvidia’s top competitor, Intel, also joined forces with an electric vehicle maker when it announced last month a partnership with Nio to release a highly automated model in China in 2022.
• Amnon Shashua, CEO of Intel’s automotive sensor company Mobileye, expressed a positive view about a rollout in China due to its centralized regulatory environment, adding that Chinese regulators were currently standardizing Mobileye’s safety model into law.

One year since Google-backed Waymo started picking up passengers for its autonomous ride-hailing service in Phoenix, Chinese startup WeRide has bet big on driverless mobility with its own driverless taxi pilot in Guangzhou.

The backstory: WeRide is one of a handful of Chinese companies to rank highly in last year’s autonomous vehicle trial report released by the Department of Motor Vehicles of California, the world’s busiest testing ground for the industry.

• With Level 4, highly autonomous vehicles at its disposal, WeRide aims to bring futuristic robotaxis to the mass market soon via a scalable business model.
• Wang Jin, former senior vice-president at Baidu’s autonomous driving unit, formed WeRide in Silicon Valley in April 2017, when it was known as Jingchi.ai.
• Wang stepped down as CEO and left the company in March 2018 amid a Baidu lawsuit over alleged theft of trade secrets. Baidu dropped the case, and the startup changed its name to WeRide later that year.
• WeRide moved its global headquarters from Sunnyvale to Guangzhou in late 2017 and runs two research and development (R&D) centers in Beijing and San Jose, as well as a regional branch in Anqing, eastern Anhui province.
• Renowned venture capitalist Kai-fu Lee has dubbed WeRide, the Waymo of China, the company’s Chief Operating Officer Zhang Li said earlier this year. The company began looking for fresh funding in September.

Unique selling point: Different from almost all rivals including Pony.ai, WeRide focuses on making driverless ride-hailing a viable business by meeting the challenges of commercialization, including fleet management, government approvals and marketing. In this way, the company has gained first-mover advantages over its peers.

• The startup launched a robotaxi pilot of 20 Nissan cars in Guangzhou Science City area late last month, the first such project in a first-tier Chinese city.
• The company handed out vouchers worth RMB 200 ($28) randomly to citizens within the area, to boost rider numbers.
• COO Zhang Li told TechNode that the firm would put around 50 autonomous cars into service next year.

“We only applied for test licenses in Guangzhou because we want to create a solid, replicable, and sustainable business in our home city first. Our priority is to establish a robust and scalable robotaxi ecosystem here in Guangzhou—algorithms, hardware, and business models, and after that, we can expand into other cities.”

—WeRide COO Zhang Li, speaking to TechNode

The investors: WeRide has brought in a diverse pool of investors, including Alliance Renault-Nissan-Mitsubishi, Kai-fu Lee’s Sinovation Ventures, and AI unicorn Sensetime.

• The company has not revealed its total financing amount or valuation. The last time it revealed funding numbers was its 2017 Pre-A Series when it pooled $57 million.

Present condition: WeRide is working with local partners to modify dozens of new taxi cabs into highly autonomous vehicles compliant with local rules. The firm will put them into service in some areas of Guangzhou next year.

• To this end, WeRide formed a RMB 180 million ($25.5 million) joint venture with south China’s largest taxi operator, Baiyun Taxi Group, and state-owned Science City Guangzhou Investment Group.
• The JV has hired dozens of full-time engineers and operational staff, along with around 150 part-time safety drivers, Zhang Li said. The unit has drawn up 2020 sales forecasts and established a remote control center for driverless operations.
• The unit requires a safety driver to sit behind the wheel at present but aims for completely driverless vehicles to roll out as early as 2022.
• One-third of WeRide’s more than 300 employees are in Silicon Valley. Its 100-vehicle fleet has racked up 1 million kilometers (621,371 miles) of testing in China and the US combined, with licenses granted by Guangzhou authorities and California DMV.

The landscape: Several Chinese tech giants and AV startups have drawn up timeframes to bring robotaxi services to market. Industry rival Pony.ai has accumulated more than 40,000 rides as of September in Guangzhou and Beijing, as part of an invite-only pilot scheme.

• Baidu announced the launch of an early robotaxi program in Changsha, the provincial capital of central Hunan in September, though a spokeswoman declined to reveal details when contacted by TechNode.
• Ride-hailing giant Didi Chuxing and AV startup AutoX plan to launch autonomous taxis in Shanghai as early as the end of 2019.

Prospects: WeRide aims to steal a march on competitors by being the first market entrant in the field. However, revenue outlook is unclear given the technical limitations and the unready regulatory environment.

• While AV startups pursuing robotaxis enjoy strong support from Chinese authorities, regulators remain cautious about commercial rollouts. Rushing for normal operations would be “inappropriate” at this moment when self-driving still lacks safety, stability, and comfort, Guangzhou Transportation Bureau told TechNode.
• WeRide has no plan to monetize the program at present, Zhang said, adding that it will validate technologies, deploy a viable fleet and create robust business cases.
• The company intends to collaborate with taxi operators, ride-hailing platforms, and car-sharing services for a national rollout in the future.
• Robotaxi is considered a potential disruptor for the mobility and auto markets. However, this can only happen when human drivers, the most costly element, are removed from the process, Zhang said.

A verified driver on ride-hailing platform Didi registered in the southern Chinese city of Nanjing stabbed his passenger in the arm following an argument, media outlet JSTV reported.

Why it matters: Didi’s safety measures attracted public outcry and government censure last year after two separate female passengers using the platform were raped and murdered by drivers registered under its carpooling service Hitch.

• In the aftermath of the two incidents, Didi suspended the Hitch service and introduced stricter background checks for its drivers. The company also introduced a series of features to aimed at increasing passenger safety.

Details: The incident happened at around 3 a.m. on Nov. 9 after the passenger asked the driver to go faster and the driver refused. The driver told the passenger to leave the car, and the two started to argue outside, which soon escalated into a fight, JSTV reported.

• During the fight, the passenger pinned the driver to the ground, and the driver stabbed him in the right arm with a knife, the report cited the passenger as saying.
• Following the incident, the driver was put into criminal detention, while the passenger was sent to the hospital and discharged on Nov. 11.
• A Didi spokesperson confirmed the cause of the incident to TechNode after checking recordings from the order, saying that the passenger was asking the driver to exceed the speed limit.
• According to a screenshot of the order on Didi obtained by JSTV, the driver is a verified driver with a five-star rating. He has completed more than 10,000 orders prior to the incident.
• A Didi representative covered some of the passenger’s medical expenses but also required him to sign an agreement saying he would not disclose the incident to any media organization, the passenger told JSTV. After the passenger refused, the representative said he would no longer cover any related medical expenses.
• A second representative from the platform, however, told JSTV that they were only asking the passenger not to disclose how Didi deals with the matter.

Context: Last week, Didi announced plans to relaunch Hitch later in November, more than a year after suspending the service.

• Didi’s new rules for Hitch initially barred female users from using the service between 8 p.m. and 5 a.m. the next day.
• Following public backlash criticizing the company for sexist policies, Didi said it would standardize operating hours for Hitch to run from 5 a.m. to 8 p.m. for all users.

German auto giant Daimler is launching a ride-hailing service in China in partnership with Zhejiang-based automaker Geely, aiming to join an already crowded market dominated by Didi Chuxing.

Why it matters: Car manufacturers in China hurt by a slowing auto market are looking to shift into the country’s mobility sector to shore up growth.

• Chinese OEMs are piling into the market. T3, a ride-hailing platform co-developed by FAW, Dongfeng Motor, and Chang’an last month announced it had surpassed 50,000 daily average rides in the eastern city of Nanjing.
• SAIC’s ride-hailing platform Xiangdao in late August revealed daily order volume of 30,000 in its home city of Shanghai nine months after launching its service.
• Didi Chuxing remains dominant, offering more than 27 million rides on average each day.

Details: Geely and Daimler will roll out a premium ride-hailing service called Staride starting in Hangzhou, capital of eastern Zhejiang province, by year-end, said Geely chairman Li Shufu, according to the company’s official WeChat account.

• The two automakers in May set up a 50:50 joint venture (JV) with registered capital of RMB 1.7 billion ($242 million) after reaching an agreement to enhance their “strong position in the mobility market” in late 2018.
• Initially, the platform will feature a proprietary fleet with all new Mercedes-Benz E, V, and S Class vehicles, and will later expand to include electric Geely cars, according to a Financial Times report.
• A Staride app is available on Chinese Android app stores, but is currently being tested internally, according to a notification on the app.
• The size of the fleet and its expansion plan is unknown, but a person close to the JV told TechNode that Geely will be responsible for vehicle scheduling and fleet management, and a former Didi executive was recently hired as CEO of the company.
• A Geely spokesman declined to comment when contacted by TechNode on Monday.

Context: Chinese automakers are looking for ways to tap the ride-hailing market, which is seen as an increasingly important business for traditional automakers.

• Geely was an early mover into ride-hailing with the launch of its Caocao Chuxing service in the eastern city of Ningbo in late 2015. The service is available to users from more than 50 Chinese cities, and averages 1.65 million rides each day, Li said.
• Revenue for China’s largest private automaker declined 11% year on year to RMB 47.5 billion in the first half of the year, while its net profits plunged 40% year on year to RMB 4.01 billion.

Hyundai Motor Group is partnering with Chinese self-driving startup Pony.ai and US mobility firm Via to launch a commercial ride-hailing service in the city of Irvine in southern California starting in November.

Why it matters: Hyundai is the latest entrant to self-driving vehicles in ride-hailing as global companies take aim at Google’s Waymo, which began trial operations in Arizona a year ago.

• The South Korean automaker ramped up quickly with the help of Pony.ai, one of only four companies with permission to offer autonomous vehicle (AV) rides to the public in California. The other three are Waymo, AV startup Zoox, and AutoX.

Detail: The pilot, called the BotRide, will be introduced to several hundred Irvine residents in the very center of the city starting Nov. 4, the companies said on Friday.

• As part of the pilot phase of the program, a fleet of 10 self-driving Hyundai KONA electric crossover vehicles will provide shared, on-demand, ride-sharing services for free until the end of January 2020.
• Sequoia Capital China-backed Pony.ai built the driverless system in a partnership with the Korean automaker, while mobility service developer Via developed the ride-hailing platform and application with the same name.
• Via said its algorithms allows multiple riders to share a vehicle in a quick and efficient way, guiding passengers to nearby stops for pick-up and drop-off.
• Equipped with Pony.ai’s sensor system and self-developed software, the vehicle is expected to detect the surrounding environment, predict where pedestrians will walk, and plan actions accordingly. Two human operators will be on board during the initial trial period.

The Chinese startup battling for robotaxi supremacy

Context: Auto tech companies are stepping up efforts to roll out commercial self-driving taxi service, seen as an important step for the deployment of fully autonomous vehicles because companies can start to recoup the significant costs involved.

• Waymo in December 2018 rolled out its first autonomous taxi service Waymo One after ferrying a limited pool of volunteers in a fleet of robotaxis in the Phoenix area beginning early 2017.
• The company in May announced that it had enrolled 1,000 customers, revealing plans to partner with ride-hailing platform Lyft to offer a selected group of users rides in the area around Phoenix.

Chinese ride-hailing giant Didi Chuxing is opening up its significant stores of transit data with the release of two major datasets in order to improve understanding of transport patterns and optimize infrastructure investments.

Why it matters: The move is likely to win the company goodwill from city officials after attracting heightened scrutiny from authorities, especially over the past year. Machine-learning applications, largely driven by data sharing, play a critical role in resource utilization and planning safer, smarter transport networks.

• Didi in late 2017 first launched its GAIA Initiative, a global research platform under which scientists can apply for access to anonymized data to explore traffic solutions.

Detail: Didi will make available two of its anonymized historical TTI (Travel Time Index) datasets which index urban congestion, gathered from vehicles on its platform, Didi CTO Zhang Bo announced Friday at the China National Computer Congress summit in Suzhou.

• The release contains traffic congestion indices, calculated using passenger trip information, as well as the average speed of motor vehicles on Didi’s platform over the past year in six Chinese major cities: Shenzhen, Chengdu, Xi’an, Jinan, Suzhou, and Haikou.
• The other dataset includes detailed historical trip-level data, namely anonymized start and end points and route information from Didi’s Express and Premier service tiers for a two-month period in Chengdu and Xi’an in late 2018.
• The ride-hailing giant said it has partnered with governments from more than 20 Chinese cities to provide innovative solutions for transport and traffic management, such as smart traffic signaling technologies. The company said adjusting the timing of more than 2,000 traffic lights across the country reduced congestion by 10% to 20% on average.
• Didi was not immediately available for comment when contacted by TechNode on Monday.

Ride-hailers may face app store delisting over illegal drivers in Shanghai

Context: Didi is the not the only company seeking to play an important role in a smart transportation system built around connected autonomous vehicles.

• Uber in early 2017 launched an online website called Movement using data and tools which allowed users to measure travel times between points in cities including Washington D.C., Sydney, and Manila. It was updated two years later with a feature allowing users to track vehicle speeds down to the street level in a total of 38 cities.

Traffic in the capital city of Beijing, China. (Image credit: Flickr/Remko Tanis)

WeChat Pay is integrating its credit scoring system WeChat Pay Points with ride-hailing mini programs. Users whose credit scores meet minimum requirements are eligible to waive ride pre-payments, Chinese tech media PingWest reported.

Why it matters: WeChat Pay is kicking off integrating of its credit scoring service with ride-hailing platforms just before a peak travel period during China’s week-long National Day holiday.

Details: Jisu Dache, the ride-hailing platform backed by a joint venture between automaker Geely, Tencent, and the country’s railway operator, is the first mini program to link with WeChat Pay Points. Riders can waive the payments required for booking a ride. Features for the WeChat Pay Points system can be activated from the mini program.

• For qualified users, the bill is automatically deducted from their WeChat Pay account after the trip ends.
• Jisu Dache is an aggregator for various ride-booking services including Caocao Chuxing, Shouqi Limousine & Chauffeur, and Shenzhou. Mini apps for Baidu Map and AutoNavi, also aggregator platforms, will be connected to WeChat Pay Points as well.
• Some ride-hailing services require riders to pay prior to every trip, while others only require prepayment for longer rides, such as from one city to another.

Context: This January, Tencent began testing WeChat Pay Points in numerous cities around China, basing user scores on spending behavior and personal connections, among others.

• The system is similar to Ant Financial’s Sesame Credit, which calculates user credit scores based on user data collected through its mobile payment app and e-commerce platform.
• Tencent and Alibaba, operators of mega consumer platforms, hold troves of consumer data. The two companies reportedly refused to share consumer credit information and data with government-backed credit scoring company Baihang.
• Chinese ride-hailing giant Didi Chuxing currently dominates more than 85% of the market, with more than 550 million users on its platform. It is also one of the eight internet companies working with Baihang on its consumer credit database.
• Alibaba’s map service AutoNavi has around 144.8 million monthly active users (MAUs) as of June, according to big data monitoring platform Trustdata. The app launched a new in-app ride-hailing service in July last year.
• Baidu Maps, with around 85.4 million MAUs, started offering ride-hailing services in 2015.

Autonomous driving startup AutoX announced on Saturday that it will launch a robotaxi pilot in Shanghai, the latest Chinese company to pass this particular milestone in the development of self-driving vehicles and one that comes on the heels of a similar announcement by heavyweight rival, Didi.

Why it’s important: Chinese ride-hailing giant Didi announced Friday that it would launch a robotaxi fleet of 30 driverless vehicles on the outskirts of Shanghai’s Jiading district, the same area that AutoX will be conducting its tests.

• Didi said it will start trial operations with a mix of driverless and human-piloted vehicles to handle complex traffic and road conditions in the city. It was awarded road testing permits by the city government two days before the announcement.
• The ride-hailing giant did not specify a timeline for the launch or disclose where in the district it would be testing cars, but did say that it expects the longest trip to exceed 10 kilometers (around six miles).

Detail: AutoX will deploy 100 autonomous vehicles in a pilot area of 150 square kilometers in Anting Town, which takes up nearly a third of Shanghai’s northwestern Jiading district.

• The pilot area contains residential zones, shopping centers, and office parks. Jiadiing is the city’s automotive center, housing offices and manufacturing plants for major automotive players including China’s largest OEM, SAIC, and its joint venture with Volkswagen.
• AutoX also plans to set up its regional headquarters in Jiading, and expects the driverless taxi service will be available to residents as early as the end of this year.
• The California and Hong Kong-based AV startup has been testing its vehicles in more than 10 locations worldwide, including San Jose in Silicon Valley and the Nanshan district of Shenzhen, located in southern Guangdong Province.
• AutoX’s applications for government permits allowing autonomous vehicle testing in Shanghai are on track, according to an announcement sent to TechNode on Monday.

Context: Chinese AV companies are racing to launch robotaxi services in an effort to lure investors in a shrinking investment market.

• China’s AV frontrunner Pony.ai said earlier this year that it will expand its robotaxi fleet from dozens to 100 vehicles by the end of this year. The company has offered over 12,000 trips with its driverless vehicles in the Nansha district of Guangzhou in Guangdong Province since late 2018, and unveiled a partnership with Toyota on a driverless mobility service last month.
• Baidu has also said it will roll out its robotaxi pilot service, Apollo Go, with 100 FAW-made vehicles in the central city of Changsha by year-end.
• Guangzhou-based WeRide has partnered with the city’s largest cab operator, Baiyun Taxi Group, in an effort to provide intelligent mobility service in the city next year.
• The undisputed leader in autonomous driving, US company Alphabet’s Waymo, began piloting self-piloted ride-hailing services in December.

Ride-hailing giant Didi will launch a pilot robotaxi fleet in Shanghai, allowing passengers to book rides in autonomous vehicles through its app, the company said on Friday.

Why it matters: Didi is the latest tech firm to announce plans to test a fleet of autonomous taxis in China, following similar initiatives by search giant Baidu and self-driving startup Pony.ai.

• Didi this month spun off its self-driving unit. The move is seen as an effort to refine its business structure before a rumored initial public offering.
• Didi CEO Cheng Wei said is an internal meeting in February that the company’s primary focus is ride-hailing, and that non-core businesses would be merged or cut altogether.

“We believe that giving ordinary citizens access to large scale, shared autonomous fleets is key to achieving our shared goal of safety, efficiency, and sustainability for future cities.”

—Didi CEO Cheng Wei in a statement on Friday

Details: The pilot program will feature 30 different models of Level 4 autonomous vehicles—cars that are fully driverless in most scenarios, the company said.

• The vehicles will be available in Shanghai’s northwestern Jiading District, the city’s automotive center.
• The company said the vehicles would be deployed in a mixed dispatching model, in which autonomous vehicles and human-driven cars will pick up passengers depending on road conditions.
• Didi was awarded pilot licenses by the Shanghai government on Wednesday, but did not disclose when the robotaxi pilot would kick off.
• The company says it has the potential to become the first company to scale robotaxi deployment in China.

Context: With around 550 million users, Didi is the largest ride-hailing company in China.

• The company has seen its share of issues. Two female Didi passengers were murdered by their drivers on separate occasions last year. Robotaxis could reduce this risk.

In spite of no clear timetable for profitability, ride-hailing companies could significantly reduce costs from investing in electric vehicles fleets, as growth continues to decelerate in China’s mobility market, according to a recent report by management consultants Bain & Company.

Why it matters: After booming for three years, China’s ride-hailing market has entered a sharp and unexpected downturn amid rider safety concerns and growing regulation from local governments. Bain expects the downward trend would continue over the next two years.

• China’s ride-hailing sector witnessed a substantial decrease in annual growth, from 39% to 25%, with a gross merchandise volume of $40 billion in 2018.
• Bain estimates that year-on-year growth will be further lowered to less than 5% in 2019, and then regain momentum ranging from 10% and 15% in 2021 with the potential return of carpooling services.

Details: Ride-hailing companies could see as much as a 65% reduction in fuel costs by switching to electric vehicles, according to the report.

• The benefit is also expected to more than offset a 15% increase in rental costs, resulting in a $380 increase in monthly income for a driver who travels distance between 200 and 300 kilometers each day.
• The cost reduction would make a direct contribution to profitability, though it depends on how platforms and drivers “divide the cake,” said Helen Liu, principal of Bain & Company.
• China also boasts the world largest charging infrastructure with over 1 million installed EV chargers as of the end of June. Beijing has already set a target of 4.8 million charging piles by 2020.
• As regulations tighten, Bain suggests ride-hailers create standardized operations for improving efficiency and pursue growth in lower-tier cities.

Context: China’s once red-hot mobility industry is shifting to a lower gear. Ride-hailers are struggling to find ways to break as stiff competition and government control restrict market leaders’ flexibility in pricing.

• Ride-hailing giant Didi Chuxing is accelerating its EV push in tie-ups with China’s largest electricity provider State Grid and UK energy giant BP. The company now has more than 600,000 electric cars operating on the platform and Didi CEO Cheng Wei hopes to expand that number to over one million by next year.
• The ride-hailing markets in first-tier cities are highly saturated. Lower-tier cities are the next growing market. That is why Chinese OEMs make a foray into the business in these cities, said Liu, who anticipates a renewal of street fights like the earlier ones seen among Didi, Kuaidi, and Uber.
• China’s mobility market is growing slower than expected, as Bain anticipates a market size of $60 million by 2021, compared with the previous estimate of $72 billion by next year.
• Only the instant delivery sector increased steadily by 40% last year, while the annual growth of bike rentals plummeted from 700% to a merely 12% in terms of GMV.

Meituan Dianping has started hiring for its new mapping and navigation services unit, a move that could help the services giant to increase its presence in ride-hailing and unmanned deliveries.

Why it matters: Mapping has become strategically important for Chinese life service platforms with ambitions of expanding into mobility.

• The move will also help with developing IT infrastructure for existing restaurant reviews and food delivery services, as well as connected driving in the long term.
• Meituan launched its on-demand driverless delivery solution in July last year and runs trial services with delivery bots in selected office complexes and campuses in Beijing, Shanghai, and Shenzhen.
• Caocao, Meituan’s ride-hailing venture with Geely, has amassed around 400,000 trips a day. The platform lags far behind Didi, which books 30 times as many fares daily.
  

Details: Meituan posted a batch of new job openings this week specifically targeting digital mapping expertise. Positions cover web development, software testing, and path algorithms.

• All the jobs are listed under a new service called “Meituan Maps.” A company spokeswoman confirmed that the company has been working on the project recently.
• The move comes just a month after the company hired Zhang Shaowen, a former intelligent navigation general manager and chief web architect at Baidu Maps, to serve as tech leader for Meituan’s location-based services (LBS) team.
• The services giant set up the LBS team late last year following corporate restructuring. The unit includes ride-hailing, and traffic data management.

Context: China’s tech giants are racing to transform into one-stop service aggregation platforms.

• Alibaba’s online mapper AutoNavi, also known as Amap, reportedly booked an average of 700,000 ride-hailing orders per day in July, making it China’s second-largest player in the sector.
• Meituan launched its own branded ride-hailing services in February 2017. The service was combined with its life services app in June this year, months after it began allowing users to access third party services such as Shouqi.

Didi Chuxing has been ordered to pay fines totaling RMB 5.5 million ($780,000) for failing to weed out unqualified drivers on its platform in Shanghai, as authorities in the eastern Chinese city harden their stance on the ride-hailing sector.

Why it matters: Shanghai’s local government has adopted a tougher stance on ride-hailers in recent months after years of relatively uncapped expansion. Regulators warned that more severe punishments could come if they don’t comply, including app removals from online stores and business suspensions.

• Scrutiny of the local sector intensified after pedestrians were injured in June when an unlicensed  Didi driver attempted to flee from police.

Details: Authorities found that as many as eight out of ten locally registered Didi drivers fail to meet regulatory standards in a series of spot checks last month. Around 15% of Meituan’s ride-hailing drivers were also found to be working illegally. Didi will pay RMB 5.5 million in penalties while Meituan has been fined RMB 1.5 million for leaving illegal drivers on its platform.

• Regulators have raided 14 ride-hailing companies over compliance issues, accusing them of turning a blind eye to disqualified drivers and faking operations reports.
• The crackdown has resulted in the number of Didi vehicles in circulation in Shanghai falling by around one-sixth from 120,000 in June to less than 100,000 as of the middle of last month.
• Didi pledged to remove around one-third of its registered drivers in the city to comply fully.

Context: China’s transport ministry rolled out a new policy in January requiring drivers to obtain special permits for ride-hailing, in addition to their driving licenses.

• The municipal governments of Beijing, Shanghai, and Tianjin last year strengthened implementation of regulations stating that only people registered in the respective cities could pick up ride-hailing fares there. The move came after the high-profile murders of two female passengers by Didi drivers in 2018.
• China is home to roughly 31 million cab drivers as of late last year, but only 1% of them, that is about 340,000 drivers, are legally qualified for ride-hailing, reported Chinese media, citing figures from the China Academy of Information and Communication Technology.

Chongqing on Friday opened China’s first 5G-enabled pilot zone for testing autonomous vehicles (AV) in a suburban area of the southwestern Chinese city, which has been eager to launch highly automated robotaxi services with local automakers.

Why it matters: Chongqing’s pilot zone is the first open-road pilot testing ground for driverless vehicles, a critical next step in the development of the technology and its ability to navigate actual driving scenarios. City governments are increasingly allowing companies test AVs on public roads in an effort to support AV development. A number of local governments including Guangzhou and Changsha have refined regulations to allow AV companies to shuttle passengers and test vehicles on highways.

Details: Chongqing’s 5G networks now only cover a total area 4.3 kilometers in length in the north of the city, and local automaker Chang’an is the first car manufacturer piloting its driverless vehicles, Chinese media reported.

• Chang’an is reportedly working on various functions for its Level 4 autonomous cars, including robotaxi and automated parking. The company has not revealed a timeframe for the launch of self-driving ride-hailing services in the city.
• The automaker has partnered with FAW and Dongfeng Motors to launch a ride-hailing platform, T3, which began operating in the eastern Chinese city of Nanjing last week.
• Chongqing is one of the first 18 Chinese cities licensed to build 5G pilot mobile networks with the country’s three mobile carriers along with Guangzhou, Nanjing, and Wuhan.

Context: Chinese municipal governments are racing against each other to lead AV development in response to the central government’s push to develop core technologies.

• Changsha, a city in central Hunan Province, late last year built 21 base stations in collaboration with Huawei and China Mobile to equip the city’s closed pilot zone with 5G networks for autonomous tests in its Xiangjiang New Area. Around 200 kilometers of highway and urban roads equipped with 5G connection is under construction in the city and set to complete in September.
• China has designated C-V2X (Cellular Vehicle-to-Everything), a wireless communication network linking vehicles, road infrastructure, and pedestrian devices, as its primary solution in the global race for smart vehicles and future mobility.
• The deployment of high-speed, low-latency 5G networks enable self-driving cars to more accurately process information about surrounding environments, supporting the development of autonomous ride-hailing services in the country.

Didi Chuxing on Thursday announced that it has closed a $600 million investment deal from Toyota Motor Corporation to jointly offer auto services for ride-hailing drivers on Didi’s platform.

Why it matters: The deal marks a big step forward for Didi, which seeks closer ties with traditional automakers to extend its dominance in the Chinese ride-hailing market. Other players across mobility and internet sectors, from OEMs to bike-rental firms to lifestyle platforms, are taking aim at the ride-hailing market in direct competition with Didi.

• Didi began setting up its mobility-automotive industry alliance in April 2018, and has wooed upwards of 30 OEMs and key suppliers worldwide in an aim to offer shared mobility services with new energy vehicles.
• State-owned automakers FAW, Chinese largest private car company Geely, and German automaker Volkswagen are some of its allies.

Details: Toyota, Didi, and GAC Toyota Motor will establish a joint venture offering car leasing, fleet management, and other vehicle-related services, said a Didi spokesman. Guangzhou-based GAC Toyota itself is a car manufacturing company formed between automakers GAC Group and Toyota in 2004.

• The two companies are also piloting services to drivers including car maintenance and self-driving guidance based on Toyota’s proprietary mobility services platform (TMSP), a form of information infrastructure that supports various mobility services.
• Toyota and Didi first partnered in January 2018, when the Japanese auto giant unveiled “e-Palette,” a driverless all-electric concept vehicle designed for a range of Mobility as a Service (MaaS) businesses. Didi was one of the partners in testing vehicles for a variety of functions, including on-demand delivery and carpooling, apart from Amazon and Pizza Hut.
• Speculation about Toyota’s investment in Didi has been circulating since May this year. Didi is now valued at about $62 billion.

“I am delighted that we are strengthening our collaboration—which utilizes Toyota’s connected technologies and next-generation BEVs—with DiDi … Looking ahead, we will work with DiDi to develop services that are more attractive, safe and secure for our customers in China.”

—Shigeki Tomoyama, Toyota executive vice president

Context: Global automakers and Chinese ride-hailing firms are shifting focus to comply with the central government’s goal of one electric car out of every five vehicles sold in 2025.

• Toyota said in June that it expects to sell 5.5 million electrified vehicles worldwide in 2025, moving up the target date by five years. This was followed by the partnership with China’s largest EV maker BYD earlier this week, with an aim to launch 10 battery electric vehicle models to the Chinese market over the next five years.
• T3 Chuxing, a Chinese ride-hailing company co-established by three state-backed automakers, said Monday that it plans to purchase 300,000 cars over the next three years, and its fleet will consist entirely of electrified cars.
• Beijing municipal government will replace all gas-powered taxis with electric cars over the next two years. More than 20 Chinese municipal governments are following suit, including the southwestern Chinese city of Chengdu and Xi’an, capital of western Shanxi province.

T3 Chuxing, a Chinese ride-hailing platform developed by three state-backed automakers, on Tuesday launched its business in the eastern Chinese city of Nanjing, in what many see as the most significant challenge yet to ride-hailing giant Didi’s near-monopoly over the industry.

Why it matters: T3, comprised of FAW, Dongfeng Motor, and Chang’an, are joining the hordes of Chinese car manufacturers flocking to the ride-hailing market, a component of the growing shared mobility sector, in an open challenge to market leader Didi Chuxing.

• Last month, state-backed GAC Group launched a ride-hailing platform named OnTime in Guangzhou with immediate plans to expand into the Greater Bay Area, following the launch of Xiangdao, Chinese largest automaker SAIC’s mobility service.
• So far at least 20 companies, including Geely, Shouqi, and BMW, are offering ride-hailing in China.

Details: T3 will expand its ride-hailing service to six major Chinese cities including Chongqing and Wuhan by year-end, and further to most provincial capitals by the end of 2020.

• T3 Chuxing is a business-to-consumer model, operating proprietary electric vehicles with high-quality drivers hired and managed by the platform as opposed to rivals which primarily use self-employed drivers, said the company.
• The company said that it will not charge extra fees during peak times, and all the drivers on its platform will be strictly in compliance with government regulations.
• It also plans to initially offer “a fair number of subsidies” for user acquisition, but has said that burning cash will not happen since “that would be stupid behavior,” Caixin cited Cui Dayong, CEO of T3 and a former executive at FAW, as saying.
• Backed by Chinese internet giants including Suning, Alibaba, and Tencent, T3 has said that it will lead the market in smart mobility by 2025, with an offering of more than 1 million cars and related services such as charging, maintenance, insurance, and car rental.

T3 was not immediately available to comment when contacted by TechNode on Tuesday.

Context: The Chinese mobility service market has grown at double-digit rates over the past several years, and is estimated to reach $656 billion by 2030, as is shown in reports from consulting firms McKinsey and PwC.

• Shifting into ride-hailing is how OEMs are responding to mass adoption of driverless mobility; in fact, joining the ride-hailing industry will be critical as the broader mobility industry shifts, according to Cui.

“If automakers just produce vehicles and don’t offer services to consumers by that time, it would be a huge shock to the entire [auto] industry.”

—Cui Dayong, T3 Chuxing CEO

Didi Chuxing said Monday that it will set up a joint venture (JV) in the Middle East in a partnership with local investors, as the company expands its global footprint.

Why it matters: The deal is Didi’s latest push into countries within the Middle East and North Africa two years after it invested in the Dubai-based online taxi service platform Careem.

• The Chinese ride-hailing giant has been actively expanding the overseas market amid tightened regulations and rising costs in its home market. The company said earlier this month that it expects to invest RMB 2 billion ($300 million) to address safety issues on its ride-hailing platform in China this year.

Details: Didi will form a JV headquartered in Abu Dhabi in a partnership with Symphony Investment, an Asia-focused investment firm mainly funded by Mohamed Alabbar, chairman of Dubai real estate giant Emaar Properties.

• At the current stage, the JV will deliver products and services related to the sharing economy with an aim to “contribute to economic collaboration” between China and the region, according to a statement.
• The company said that Abu Dhabi’s state investor Mubadala Investment is also considering joining the partnership. Mubadala had reportedly invested in Didi in late 2017, and was a major sponsor of SoftBank’s $100 billion Vision Fund with a commitment of $15 billion earlier that year.
• It is unknown whether Didi will expand its presence launching ride-hailing or bike-rental services under its own brand in the Middle East. A Didi spokesman declined to comment when contacted by TechNode on Tuesday.
• Didi and Symphony Investment signed the agreement on Monday at the UAE-China Economic Forum in Beijing. Chinese vice minister of commerce Yu Jianhua and Sultan Bin Saeed Al Mansoori, minister of economy of the UAE, attended the meeting.

Context: The Chinese ride hailing giant has invested or partnered with seven overseas rivals, including Uber, Lyft, and India’s Ola, since it embarked on its global business expansion in 2015.

• Didi acquired 99, a ride-sharing company in Brazil in a $1 billion deal in early 2018, and just launched its ride-hailing services in Chile and Colombia last month.

Chinese ride-hailing firm Didi Chuxing is reportedly raising up to $2 billion from investors while bike-rental company Hellobike is seeking a $400 million cash infusion, the latest in a series of moves which signal that the two mobility firms are preparing for escalating competition.

Why it matters: Didi and Hellobike are now the biggest players in China’s ride-hailing and bike-rental markets, respectively, and they are increasingly moving onto each other’s turf.

• One of the world’s biggest startups, Didi formed a new business group including bike-sharing and motor scooter rentals in June in an aim to expand into the two-wheeler market.
• Hellobike launched a ride-hailing service on its app at the beginning of this year, and on May 21 said it had upwards of 2 million registered drivers across 300 Chinese cities in trial operations.

Both Didi and Hellobike declined to comment on funding matters when contacted by TechNode on Thursday.

Details: Didi intends to sell additional shares at the same price as when it raised $500 million from US travel firm Booking Holdings in July 2018, the Wall Street Journal reported citing a person familiar with the matter. Hellobike’s new round of funding totaling $400 million is led by Ant Financial, Chinese media said Wednesday.

• Didi will be valued around $62 billion after the deal, up from $51.6 billion as of December, according to securities filings from Uber earlier this year, making it the third-largest privately owned tech company worldwide after Ant Financial and Bytedance.
• Hellobike will have a paper valuation of $5 billion after the funding round. The company secured five rounds of investment totaling RMB 20 billion in 2018, and is backed by Ant Financial and investment firms Primavera Capital Group and GGV Capital.

Context: Chinese ride-hailing and shared-bike markets are reshuffling as investment capital and regulations tighten. Big industry players are seeking new growth opportunities to increase their presence.

• The next stage of growth for ride-hailing apps may quickly evolve into a battle for traffic. Didi this week launched an open platform allowing users to book rides from rival companies amid driver shortages and increasing costs, following life services super-app Meituan in April and three state-backed automakers.
• Alibaba-backed Amap has offered similar services with an aggregation model since July 2017. It reportedly has 700,000 ride orders a day, around 3% of the number of trips on Didi’s platform every day.
• Hellobike continues to push its shared electric scooter business forward, working with Ant Financial and Chinese battery maker CATL to build battery swapping infrastructure nationwide. It so far already provides battery charging services to 2 million e-bikes.

Ride-hailing platform Didi will allow users to book rides operated by other companies within its app, the company said in a statement on Monday. The move follows Meituan’s recent foray into ride aggregation services.

Why it matters: The new service includes cars from platforms operated by state-backed automakers FAW, GAC, and Dongfeng Motors. Didi says that it currently has around 550 million users in the country.

• Chinese carmakers are increasingly entering the ride-hailing market, as auto sales in the country plummet amid a slowing economy.
• Car sales fell by more than 10% in the first half of 2019 compared with the same period a year earlier.

Details: Didi will help auto manufacturers through its artificial intelligence (AI) capabilities and operational experience to build their capacity operating connected vehicles, the company said in its statement.

• Didi said last month that it was looking to expand its partnership with GAC to include ride-hailing operations and autonomous vehicles.
• The company has also invested in GAC’s ride-hailing platform OnTime.

Context: In May, lifestyle services company Meituan, which runs its own ride-hailing platform, opened its app up to companies including Shouqi Limousine & Chauffeur, Caocao Chuxing, and Shenzhou. Didi was not included in the service.

• Meituan had been running a trial of the operation in Nanjing and Shanghai. The company later expanded the service to cities including Suzhou, Hangzhou, and Ningbo, as well as Xi’an, Chengdu, Wuhan, and Shenzhen.

Shouqi Limousine & Chauffeur, a ride-hailing service backed by state-owned transport company Shouqi Group, expects to make a profit by the end of this year, CEO Wei Dong said on Wednesday.

Why it matters: If Shouqi’s forecast holds true, China’s second largest ride-hailing service may be the first in the industry to break even.

• Global ride-hailing giants, including Didi, Uber, and Lyft, are struggling to turn their popularity into profits. Lyft reported losses amounting to $911 million in 2018, while Didi reportedly suffered a loss of nearly RMB 10.9 billion (around $1.48 billion) during the same period.
• Shouqi secured RMB 600 million in a Series B in late 2017, followed by another RMB 700 million led by Baidu and Nio Capital, an investment firm founded by Chinese EV maker Nio.

Details: Shouqi is already profitable in Shanghai and Shenzhen, and its businesses in cities including Beijing and Guangzhou are nearing a break-even point, Wei said Wednesday in a letter sent to employees.

• The company attributed the achievement to its high-end positioning and quality services. It says it is China’s second-largest player with more than 53 million registered users in upwards of 70 domestic cities. All the drivers on its platform which services cities including Beijing and Nanjing are regulation-compliant, Wei added.
• Shouqi ranked a distant second with 3.3 million monthly active users in the Chinese ride-hailing market, followed by Geely-backed carpooling service Caocao with 2.5 million users, and Uber with around 960,000 as of end-May, recent figures from market research firm Analysys show. Didi dominates the market with 75.2 million active users.

A Didi executive said on Wednesday at that the company has launched virtual banking services to its drivers and passengers in Brazil as the company expands in Latin America.

Why it matters: The Beijing-based ride-hailing giant is expanding its business to international markets such as Southeast Asia, Japan, and Latin America, the major fronts in its competition with Uber.

• Uber CTO Thuan Pham said on Tuesday to an audience at the RISE Conference in Hong Kong that the competition with Didi is healthy and necessary. “If you don’t have competition, then you can become complacent because there’s no competition to challenge,” he said.
• Zheng Bu, chief security officer and vice president of international business technology at Didi, agreed and added that competition spurs the company to seek out different problems that users and drivers are experiencing.

“In some of the countries or regions, our peers are already there. But there are still many user pain points waiting for us to solve. So we go there and address the local people’s pain points.“

— Zheng Bu, Didi’s chief security officer

Details: Didi said that many people in Brazil don’t have a bank account so drivers and passengers cannot make online transactions with the ride-hailing platform. Zheng said the company offers virtual banking services to drivers by providing them with a MasterCard debit card, called the 99 Card.

• Drivers in Brazil get a 99 Card immediately after registering. The bank card allows drivers to receive income from their daily rides, as well as withdraw cash or make payments.
• Didi also introduced Didi Cash, an e-wallet that allows riders to top up their Didi account through a partnership with local convenience stores.

Context: In Brazil, the most populous country in Latin America, around one-third of adults were unbanked as of end-2017, according to a World Bank report.

• “In Brazil, there are many people who can drive, but they are not able to become Didi drivers mainly because they are unbanked. So we went ahead and started to offer banking services to them,” said Zheng.
• Didi acquired control of Brazilian ride-hailing startup, 99, in January 2018, and continues to offer its service in Brazil under the 99 brand, said Zheng.

Didi announced on Monday that it will raise ride fares in the capital city of Beijing beginning July 11 to attract more qualified drivers as shortages become a major concern for ride-hailing services.

Why it matters: Didi’s challenges mount as competition intensifies and regulation remains strict, prompting concerns that it will further cede share to other players.

• The Chinese ride-hailing giant spent nearly a third of its commission revenue on driver subsidies in the fourth quarter of 2018.
• However, around a fifth of total ride demand on its lower-cost Express ride-hailing service goes unmet on weekday mornings in Beijing due to labor shortages, Didi said in an announcement.

“The disparity between supply and demand in Beijing has grown severe despite taking a series of measures to ease the situation.”

— Didi announcement

Details: Base fares for Beijing riders will increase RMB 1 to RMB 14 (around $2) during morning and evening peak times, as well as for late night service.

• Per-kilometer rates will increase to RMB 1.8 from RMB 1.6 during the morning rush hour, and late-night riders will pay a more than 30% premium to RMB 2.15 per kilometer. The base charge during off-peak periods (10 a.m. to 5 p.m.) will remain unchanged.

Context: Chinese ride-hailing companies have shifted focus from competing for users to attracting qualified drivers, a limited resource in many cities, according to a Jiemian report citing Wei Dong, CEO of state-owned ride-hailing service Shouqi.

• Chinese regulators began enforcing rules on legally qualified drivers following two separate murders of female passengers by Didi drivers. The city governments of Beijing, Shanghai, and Tianjin all began requiring that only drivers with identity cards for each city could drive for ride-hailing services beginning in 2016.

Didi will spend another RMB 2 billion ($300 million) on safety improvements this year including driver management and customer service, as it continues to go “all-in” on keeping users safe.

The company “works day and night” to be an open and transparent platform and welcomes public scrutiny, President Jean Liu said at Didi’s first media day since the murders of two users of its carpooling service Hitch last year.

The ride-hailing giant has removed more than 306,000 unqualified and fraudulent drivers from its platform since the incidents and set up a special safety team of more than 2,500 workers. It has also brought in 9,000 customer service staff to handle 300,000 daily calls on average.

In addition, 99% of cars are now equipped with audio recording capabilities and one out of five are monitored with onboard cameras following a trial project. The company plans to increase the coverage to over half by the year-end, and will pay the majority of costs incurred, according to Vice-president Lai Chunbo. The encrypted recordings, only accessible to Didi’s safety team and law enforcement, are deleted with seven days of each fare.

Didi invested heavily following the incidents amid public outcry and intense government scrutiny, making a monumental shift in focus from growth to compliance. The company reportedly suffered a loss of RMB 10.9 billion for last year, amid continued driver subsidies and a clampdown on non-compliant drivers.

China’s ride-hailing landscape has changed greatly over the past year, with dozens of new players, including tech companies and automakers, piling in to get a piece of the potentially lucrative market. Life service platform Meituan began offering ride-hailing in late 2017, followed by Ant Financial-backed Hellobike a year later. Tencent partnered with GAC Group to launch Ontime in late June.

Didi has moved quickly to compete with rivals and introduced third-party ride-sharing services in May. Senior vice-president Fu Qiang said talks with local regulators have also taken place as part of efforts to tackle a driver shortage, as industry regulations are “fairly diverse” across different areas.

Fu admitted that investment in safety will affect business performance in the short-term, but maintained that the drive benefits the company’s long-term development. “More secure services are now being offered and therefore passengers are more content with their trips,” (our translation) he added.

Jean Liu would not reveal a timeframe with regards to when suspended carpooling service Hitch would come back online, but confirmed that it would take onboard public opinion to help revamp the product.

This article was corrected to reflect that Didi will invest RMB 2 billion in safety this year, not next year.

Tencent has aligned with state-backed GAC Group to launch a ride-hailing platform named OnTime in the southern Chinese city of Guangzhou this week. Chinese tech companies and automakers are battling to secure a piece of the ride-hailing industry in order to gain a stake in the mobility market of the future.

OnTime on Wednesday announced in a WeChat post that it began a two-day trial in four urban districts in the city, offering rides costing RMB 0.01. The Tencent-backed startup plans to officially launch the service in Guangzhou later this month, expand into the Greater Bay Area region, and then the rest of the country. The company’s namesake app has been available for download starting from Wednesday.

Earlier this year, GAC unveiled its investment plan to set up a RMB 1 billion ($150 million) mobility firm with a list of investors including Tencent and Guangzhou Public Transport Group. GAC and Tencent are the two largest shareholders, owning a respective 35% and 25% of the joint venture. The two companies first partnered in November 2017 when they inked a strategic partnership to explore cloud-based, intelligent, and connected vehicle solutions.

China has become the world’s largest ride-hailing market, and it is expected to double in volume to $70 billion over the next three years, research figures from Bain & Company show. Following entries by Meituan and Hellobike into the market, state-owned SAIC also launched a high-end ride-hailing service Xiangdao in December. The company says it is available in more than 154 domestic cities with upwards of 1.3 million users and 1,000 business clients. Global auto brands are also offering ride-hailing in China, including BMW, Ford, and Daimler.

However, ride-hailing giants worldwide are struggling to keep their cash-bleeding businesses afloat, prompting concerns about their sustainability. Tencent-invested Didi laid off 2,000 employees to refocus on its core business earlier this year, after reportedly losing nearly RMB 11 billion in 2018. Both Uber and Lyft recorded around $1 billion losses in the first quarter of this year and expect the heavy losses to continue in 2019.

Chinese autonomous vehicle (AV) startups, AutoX and Pony.ai, are joining an exclusive group of companies approved to offer self-driving rides to the public in California after receiving approvals from the California Public Utilities Commission (CPUC) on Tuesday.

The certificate, which expires on June 18, 2022, means the companies are approved to transport people in driverless vehicles for testing over the public highways in the state over the next three years under the state’s Autonomous Vehicle Passenger Service pilot. Vehicles must have a trained test driver behind the wheel ready to take over, charge no fees, and provide regulators with quarterly reports for each AV operating in the program.

AutoX said  that it was the first carrier to offer robotaxi pilot service to residents in California in a press release sent to TechNode on Thursday. Around 10 Level 4 driverless vehicles will be introduced through a mobile application in some areas of north San Jose and Santa Clara cities.

Pony.ai was not immediately available for comment and so far has been quiet on whether it will roll out the service, reported Chinese media. 

CPUC granted the first permit to US self-driving startup Zoox in December last year. The Foster City, California-based company reportedly plans to launch its autonomous ride-hailing service in San Francisco in 2020.

So far, more than 60 companies, including Zoox, AutoX, and Pony.ai, have already obtained permits from the California Department of Motor Vehicles (DMV) for AV testing on public roads, but they need separate permits from the state utilities commission to offer public transport services.

AutoX and Pony.ai have also been among the first batch of recipients for licenses to conduct road testing in the southern Chinese city of Guangzhou earlier this month, along with Guangzhou Automobile Group, and Chinese self-driving startups WeRide and Deepblue.

Pony.ai is so far the best-performing Chinese AV company, ranking fifth with 1,022.3 MpD (Miles per Disengagement) in the annual autonomous vehicle testing report released by the California DMV. Its outcome was far higher than its peers including Baidu (205.6), AutoX (190.8), and WeRide (173.5), but still way behind Alphabet subsidiary Waymo which had one disengagement every 11,017 miles.

AutoX, however, reported the largest number of miles traveled among the six Chinese companies at 22,710 miles between Nov. 31, 2017 through Dec. 1, 2018, followed by Baidu, whose vehicles traveled 18,093 miles in the same period.

快看｜支付宝上线境外打车小程序，首批覆盖10个国家33座城市 – Jiemian News

What happened: Mobile payment platform Alipay on Monday launched a ride-hailing mini program, allowing users to book rides in around 33 cities in 10 countries worldwide, including the US, the UK, Australia, and the United Arab Emirates (UAE). The mini program can be accessed inside the Alipay app and connects to ride-hailing platforms such as Grab in Thailand, Gett in the UK, and Careem in the UAE. The newly launched system allows users to interact with maps and text drivers in Chinese, call local police, and pay in Chinese yuan. According to Jiemian, the service will launch in more than 100 popular destinations across more than 20 countries this year.

Why important: The mini program is an attempt by Alipay to address issues Chinese tourists face when booking rides outside of China, including communicating with drivers and understanding non-Chinese maps. Mobility giant Uber’s Chinese business was bought by Didi Chuxing in 2016 after a fierce competition for market share. Since then, Didi has taken the top spot in China’s ride-hailing market (in Chinese). Alibaba does not compete directly, but, through cooperation with Hellobike, AutoNavi, Didi, and Fliggy, Alipay’s transportation services cover all aspects of Chinese people’s lives including road, rail, and air travel.

In October, a fight erupted between a passenger and the driver of a Chongqing bus. In the hubbub, the vehicle swerved across the road and through the barrier of a bridge, falling into the Yangtze River. All 15 people on board perished.

The incident sparked widespread indignation across the country as observers largely blamed the passenger for provoking the fight. It also brought to light some 20 other attacks on bus drivers that occurred in China that year, although none with so high a casualty count.

Against the backdrop of the public outcry, officials took action. “[The] government regulations’ requirements are higher now,” Liang Kun, product manager at Xiamen-based surveillance and security firm Reconova, told TechNode. Passenger aggression towards drivers can now be punished by law, and the installation of “active safety” technology is required on commercial vehicles in addition to public transportation. Some of the new measures could prevent tragedies like the one that happened in Chongqing, Liang believes.

Along with the heightening of regulations surrounding road safety, Reconova has seen more demand for its driver surveillance services, which include facial recognition devices that detect distracted driving as well as machine vision technology that surveys and warns of nearby vehicles and pedestrians.

The six-year-old startup, which completed a Series B last May led by Intel Capital, is part of a larger trend towards machine-assisted driving. As applications for fully-autonomous vehicle technology–for consumers, at least–proceed relatively slowly, this particular sector is accelerating, with a growing number of players, including artificial intelligence (AI) giants Sensetime and Baidu, entering the market. As a result, increased surveillance of drivers could significantly reduce the likelihood of accidents; however, it also raises certain security risks as well as potential concerns over privacy.

Eyes on road safety

On a sunny afternoon in Shenzhen, Guangdong province, TechNode joined Liang for a spin in a Reconova test vehicle. Inside five cameras were plastered in a straight line down the van’s windshield, each one able to detect movements by nearby vehicles. Another device above and to the left of the steering wheel was pointed directly at the driver’s face, checking for signs of drowsiness, phone use, or smoking.

At periodic points during the drive, Liang demonstrated how the system reacts to various risky behaviors. Twice, after checking that the road is clear, he closed his eyes for a few nerve-wracking seconds before the system’s speaker barked a reprimand: “Danger, please be careful.”

Holding a phone to the side of one’s face while the van is moving elicits a similar warning, as do too-quick turns and neighboring vehicles that switch lanes without leaving enough space. In the relatively calm mid-afternoon traffic, though, the system is mostly quiet, only occasionally blaring out brief cautions.

According to Liang, camera footage of driver misdemeanors and other safety risks can be automatically uploaded to a company’s platform if the system is online.

“In accordance with Chinese law, the equipment doesn’t collect the personal information of the driver or the person being surveilled,” Liang said in reference to Reconova’s facial recognition technology, which can also verify drivers’ identities.

“We don’t know who is who,” he added. According to him, the system doesn’t cross-check images with ID information, but only checks whether someone’s facial characteristics match companies’ driver records.

This year, a major Chinese logistics company secured Reconova’s services for a part of their delivery fleet. “Our first batch has already been installed and their testing program was excellent,” Liang told TechNode. “If it really is effective,” the client has plans to expand, he said.

The company has also had “successful use cases” in the area of public transportation. Bus company clients, for instance, can install a one-click panic button on their vehicles, allowing drivers to contact police more easily in case of an emergency. Another, optional feature allows buses to be brought to a halt via remote control.

Reconova sales director Morgan Guo told TechNode in an interview that this field has grown rapidly in the last year: from 4,000 orders in 2017, demand soared to 30,000 devices installed the next year. In 2019, Guo predicts, that number could grow another “70-80%.”

Driver backlash

In addition to general public safety, increased scrutiny of truck and bus drivers is also good news for companies like Reconova, transportation firms, and insurers. The reaction of the drivers themselves, however, has been mixed.

“Drivers will use things to block this device, or bend the device around so that it’s not effective,” Liang told TechNode while gesturing to the facial recognition gadget to his left. Because employees feel that “there’s something monitoring their behavior,” Liang says, “there will be aversion.”

Hiko Lee, enterprise solution manager of GreenSafety, a startup that supplies similar driver surveillance systems to business clients in Hong Kong, Macau, and Taiwan, has heard of similar resistance from drivers.

For clients such as electricity supplier China Light and Power Company (CLP), GreenSafety assigned drivers in 50 vehicles grades based on their behavior.

“When the score is high, around 100 marks, then the performance is good” while 50-60 might be the mark of a “bad driver,” Lee told TechNode. Thanks to improvement in driver ratings over time, GreenSafety won the chance to trial their devices for two major bus companies in Hong Kong. Currently, its systems operate on around 400 vehicles in the city.

“Of course at first they really don’t appreciate it,” said Lee of CLP’s drivers. After three to six months of education, however, attitudes slowly changed.

“The Hong Kong bus and taxi drivers may work over 10 hours per day. So we will teach them by training, by lessons, by different methods–maybe talk to the management and help the management to persuade them,” Lee said.

He compares the situation to the widespread adoption of GPS tracking and basic in-vehicle cameras over the last decade. Drivers gradually accepted the initially intrusive technology because “they know that this kind of system can protect them” from liability in accidents.

Consumer-facing applications

Five months before the Chongqing bus fell into the Yangtze River, killing 15, another case of driver-passenger violence attracted national attention. In May 2018, a woman using online ride-hailing platform Didi to hitch a ride was murdered by her male driver. Just a few months later, in August, another female passenger using the same service was raped and murdered by the man behind the wheel.

The incidents sparked a nationwide backlash against Didi, and provoked official scrutiny—leading the platform to adopt a series of new safety measures, from an emergency number linkup for passengers to optional video or audio recording of rides.

Asked whether high-tech AI features might soon enter ride-hailing companies’ arsenals, both Liang and Lee said the industry showed potential.

Companies in the field are currently in talks with Reconova over facial recognition solutions to verify drivers’ identities, according to Liang. In both of last year’s high-profile Didi murders, the culprits posed as registered drivers on the app. “This need exists,” said Liang.

Tal Krzypow, vice president of product management at Israeli computer vision firm Eyesight, says  China’s ride-hailing market is just as interested in driver surveillance as “any other fleet.”

Eyesight is currently working with original equipment manufacturers and aftermarket partners to provide driving monitoring system solutions to China. “There is a willingness to adopt new technology and going to market quickly is very impressive” in the country, Kryzpow told TechNode.

Using advanced and often expensive technology such as machine learning to analyze video footage, however, may not be on the table for those companies as of yet. Lee pointed out that ride-hailing startups may not be inclined to invest so much in individual cars and drivers. However, with pressure from government as well as popular sentiment, that could change, Liang said.

Lee also foresees a larger shift to the consumer market as driver surveillance technology continues to advance. Once more affordable, accessible devices are released on the market,  “maybe the customer can just buy it from the Internet and they can install it themselves very easily.”

Privacy concerns

In a written statement compiled for TechNode, analysts from international firm BIS Research predicted rapid growth of connected and partially autonomous vehicles in China over the next two years. As a reference, they cited the Chinese government’s prediction that the domestic market for connected auto will grow to $14 billion by 2020.

However, the increasing amount of data will also require cybersecurity upgrades. “Vehicles need protection from threats such as malicious software, unauthorized access, attack on vehicle CAN [controller area network] BUS and ECUs [electronic control units], sniffing of vehicle data, loss of cloud data, and malicious codes in the vehicle, among others,” BIS analysts wrote.

Speaking of another sector of Reconova’s, smart security and surveillance systems for corporate and official clients, Morgan Guo said that “privacy will be protected.” According to Guo, the company itself doesn’t permanently store visual or other information gathered by its software, although he admitted that China’s government is by law allowed to do so.

Currently, more than 200 electric vehicle manufacturers, including Tesla, BMW, Volkswagen, and Nio have been called upon to transmit their vehicles’ location data to government-backed monitoring facilities.

That raises the question of where the data gathered by systems like Reconova’s and GreenSafety’s will be stored, and who will have access to such valuable information. Generally, how the technology is implemented is left up to buyers.

“We do provide guidelines,” said EyeSight’s Krzypow.

As Berkeley professor Alexandre M. Bayen, who directs the university’s Institute of Transportation Studies, told TechNode, however, individual drivers’ data privacy could already be compromised. According to Bayen, the issue “in a sense started 10 years ago.”

He referred to the advent of smartphones, as well as the data-gathering that accompanies their use: “Your phone activity while you’re driving, potentially the onboard car activity if your car is somehow hooked up with your phone to Bluetooth or any other link.” “All that data, it’s already there, it’s already available,” and being accessed by large tech corporations like Google, Bayen added.

“With more data, of course, the problem grows,” Bayen said. But he believes that the ultimate responsibility of protecting that information falls on the government. “To me, the technology is just a means to reveal the data; the real question is the question of policy,” Bayen said.

With additional reporting by Chris Udemans.

Toyota mulls $548m investment in Chinese ride-hailer Didi Chuxing – Nikkei Asian Review

What happened: Toyota Motor Corp is planning to invest about 60 billion yen (around $548 million) in Chinese ride-hailing giant Didi, hoping to gain a foothold in the world’s largest auto market. It is also reportedly considering setting up a new joint company with Didi offering mobility services in China. A Toyota spokesman told Reuters that the company continues to evaluate its global business strategies in sharing mobility, electric vehicles, and connected driverless technologies, but has “nothing to announce at this time.”

Why is important: Toyota has made large deals with some other ride-hailing firms in hopes of becoming a “mobility company” rather than just a traditional auto manufacturer. The Japanese automaker struck a $500 million investment deal with Uber in August to work jointly on autonomous vehicles, which will be deployed in the US company’s ride-hailing network. It also invested $1 billion in Grab, the largest ride-hailing service in Southeast Asia last year, in an attempt to co-expand the range of services from ride-hailing to new areas such as food delivery and mobile payment. Didi has worked with Toyota as one of its partners to test e-Palette, a self-driving concept vehicle for on-demand delivery since January last year , alongside Uber, Amazon, and Pizza Hut.

Lifestyle services super app Meituan has expanded its aggregated ride-hailing services to an additional 15 cities around China, intensifying competition in the sector and taking direct aim at Didi.

The company initially launched the service, which allows users to access vehicles from several ride-hailing platforms within Meituan’s app, in Nanjing and Shanghai in late April. Users are given the choice of hailing rides using Shouqi Limousine & Chauffeur, Caocao Chuxing, and Shenzhou, as well as its own Meituan Dache. Market leader Didi has not been included in the service.

Meituan has now expanded the scope of the platform to an additional 15 cities, including the eastern cities of Suzhou, Hangzhou, and Ningbo, as well as Xi’an, Chengdu, Wuhan, and Shenzhen.

Meituan isn’t the first platform that allows users to book trips from multiple ride-hailing companies. The firm joins Chinese map apps Autonavi and Baidu Map in offering the service.

Meituan is taking a more cautious approach to improving its customer experience amid increased regulation of the ride-hailing sector and a 57% increase in its operating losses in the fourth quarter of 2018. Aggregating rides allows the company to offer additional functionality without a significant increase in costs.

Teaming up with the likes of Shouqi and Shenzhou also allows Meituan to take on Didi, which currently commands the ride-hailing market in China. Didi has seen increased scrutiny over the past year following two high profile murders of passengers by their drivers using the company’s carpooling service Hitch.

Since then, several smaller players have set up shop, hoping to take a share of the market. Most recently, electric vehicle (EV) maker Xpeng, also known as Xiaopeng, began operating a ride-hailing pilot in the southern Chinese city of Guangzhou. Unlike other companies, the EV manufacturer will employ all of its drivers.

Several automakers are looking to offer similar services. In December Mercedes Benz and Volkswagen partnered on a high-end ride-hailing service in Shanghai, while Daimler and Geely set up a joint venture in the eastern Chinese city of Hangzhou last week, focusing on ride-hailing and car rental services. Tech giants Tencent and Alibaba also seek to gain a share of the market, setting up a RMB 10 billion (around $1.5 billion) mobility venture with state-owned automaker Changan in Nanjing.

Chinese electric vehicle (EV) manufacturer Xiaopeng on Thursday launched a ride-hailing service in southern China, as automakers look to the industry and market leader Didi accrues losses from its operations.

Xiaopeng, also known as Xpeng, launched the trial service, dubbed Pengster, in Guangzhou, where the company is headquartered. The move comes after the EV maker was granted a ride-hailing license by city authorities earlier this week.

Unlike Didi, Xiaopeng will employ all of the “trained, verified and monitored professional drivers” on its platform, the company said in a statement. Xiaopeng is rolling out the service with an initial “several hundred” of its G3 SUVs, though it plans to increase its fleet size to 2,000 by the end of 2019.

The service is currently only available in Guangzhou but may expand gradually to other cities over time, a Xiaopeng spokeswoman told TechNode.

“The Pengster service will allow Xpeng Motors to gain important operational experience from a diversified range of driving scenarios, [and] deeper understanding of customer behavior and preference,” the company said.

Xiaopeng is counting on raising brand awareness by having more of its vehicles on the road, which will effectively function as on-the-road showrooms. Operating a ride-hailing fleet also gives the company access to additional training data that could be used to further develop its autonomous driving system. In April, Xiaopeng delivered 2,200 vehicles in China.

“We are an EV designer and manufacturer,” the spokeswoman said. “We are doing this from a different point of view.”

Tu Le, founder of consultancy Sino Auto Insights, told TechNode that Xiaopeng needs to sell four to five times the number of vehicles the company did in April in order to justify its valuation and build enough working capital to keep the business going.

“They’re perhaps not seeing the demand for their vehicles that they originally forecast,” Le said. “This is another way to get vehicles built, on the road, and in use.”

China’s ride-hailing market has seen upheaval over the past year, as the industry has sought solutions for safety concerns after two passengers were murdered by their drivers last year while using Didi’s carpooling service Hitch. Several city governments have since imposed rules on platforms, requiring that vehicles and drivers register in the city in which they operate.

Nonetheless, these rules haven’t stopped newer entrants, which include automakers, from setting up operations around the country, even as Didi reports it costs more to operate some trips than the company makes in commission revenue.

In December Mercedes Benz and Volkswagen partnered on a high-end ride-hailing service in Shanghai. Meanwhile, Tencent, Alibaba, and automakers including state-owned Changan set up a RMB 10 billion (around $1.5 billion) ride-hailing venture in Nanjing. Like Xiaopeng’s mobility platform, the company’s focus is on electric cars.

Most recently, automakers Daimler and Geely set up a joint venture in the eastern Chinese city of Hangzhou to provide ride-hailing and car rental services.

But market leader Didi continues to make losses. The company last year reportedly lost nearly RMB 11 billion, almost five times higher than losses in 2017. In April, Didi reported that operating costs accounted for around 21% of total fare revenue from ride hailing in the fourth quarter of 2018, two percentage points higher than its commission rate from fares. Didi also said the company spent one-third of its commission revenue on driver subsidies during the same period.

Ant Financial-backed Hello Chuxing seeks hefty financing that would take valuation to USD 4 billion – KrASIA

What happened: Chinese bike-rental platform Hello TransTech (formerly Hello Bike) is reportedly seeking to raise several hundred million dollars in new financing that would bump its valuation to $4 billion. In December, the company secured RMB 4 billion (around $580 million) in a financing round led by Alibaba’s Ant Financial and Primavera Capital Group, which valued the company at more than $2.5 billion.

Why it’s important: In February, the ride-hailing company launched its carpooling service in a bid to capture a larger share of the mobility market. At the time, the company said it would put RMB 500 million into promoting the new service, which is similar to ride-hailing giant Didi’s Hitch platform which has been suspended since September after the murders of two female passengers. Bloomberg reported last month the cash-hungry company was seeking to raise between $500 million to $1 billion. Co-founder Li Kaizhu said in an interview earlier this year that the company would seek an IPO in the future but did not specify a timeframe.

Chinese electric carmaker Xpeng the latest to jump into ride-hailing despite ongoing losses at market leader Didi – South China Morning Post

What happened: Electric vehicle (EV) maker Xiaopeng is preparing to take on Didi as it enters China’s competitive ride-hailing sector. The company was granted an operating license by Guangzhou authorities on Monday and began advertising jobs for fleet operators and mobility operations specialists on its website in March. Xiaopeng declined to comment on its timetable or expected fleet size, according to the South China Morning Post.

Why it’s important: Entering the ride-hailing market would put Xiaopeng up against market leader Didi, which has been losing money on many of its trips. The company said it was pocketing 19% of each fare in China, two percentage points lower than the cost of the trip. Ride-hailing operators have also seen increased scrutiny over the past year following two high profile murders of passengers using Didi’s carpooling service. Nonetheless, Xiaopeng could be looking for an additional revenue stream as the government cuts its EV subsidies nationwide, putting increased pressure on manufacturers as they either absorb the extra costs or pass them on to their customers.

Editor’s note: A version of this post was previously published by ValueChampion, a research firm that aims to help consumers make smarter decisions with their money.

Since Lyft’s IPO and the precipitous drop in its stock price, many investors have been quite concerned about Uber’s upcoming IPO. To be fair, Uber has made a number of maneuvers to improve its profitability, and its newly lowered valuation could help appease some of these concerns.

In particular, Uber has famously exited its business in China, Southeast Asia and Russia in order to cut its losses; in return for selling its local businesses, it received equity stakes in its competitors, forming something of an alliance with Didi Chuxing in China, Grab in SE Asia and Yandex.Taxi in Russia. However, recent data suggests that these “alliances” actually may be less friendly than expected. In fact, each of these players are making solid progress expanding their footprints into Uber’s markets. If this trend continues, it may re-heat competition as regional whales encroach into one another’s territory, making profitability even more difficult to achieve than expected as they continue spending on subsidies and promotions to gain market share.

Didi, Yandex and Grab are encroaching on Uber’s territory

While Uber sold its China business to Didi Chuxing, the leading ride hailing app in China, Didi began competing aggressively against Uber in Mexico, where the latter has been dominant for a long time. In fact, Didi outranked Uber in the app store in November and December. Though Uber took back the top spot since January, Didi has been hot on its tail in Mexico just as Lyft has been in the US.

Yandex.Taxi’s launch into Israel has also been more successful than Uber’s own efforts in the country. While Uber has struggled to grow in this market (only ranked at around 4-8 place in the travel category of Apple App Store in the country), Yandex.Taxi’s Yango has outranked even local leader Gett in downloads since it launched late 2018.

Lastly, when Uber sold most of its SE Asia business to Grab, Uber actually retained its business in few markets where it remained dominant. Hong Kong was one of those markets, where Uber has consistently ranked as the top transportation app in the Apple App Store and Grab does not offer rides. However, Grab strangely began to outrank Uber for the first time ever starting in April despite users being unable to request rides with it, perhaps explained by vacation season as Hong Kong residents prepare for regional travel. The trend that has been continuing in May thus far amidst Uber’s various troubles. Could it possibly signal a new wave of expansion for Grab into regions like Hong Kong, Australia and Taiwan? At the very least, this type of download ranking suggests that Grab has a very legitimate chance of success should it enter the Hong Kong market.

High valuations create an imperative to expand

What’s more troubling is that these companies are very big businesses in their own right. Didi and Grab both raised billions of dollars with sky high valuations. Not only that, they also have been facing tough competition from local players like Dida Chuxing and Go Jek. A combination of high valuation, a lot of capital and difficult competition in local markets creates an imperative for these companies to expand into other markets in order to justify their valuations with better growth prospects.

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While Uber exited China, Southeast Asia and Russia to cut its losses in those markets and profit from the growth of its “investees,” it’s now apparent that these deals didn’t categorically prevent them from expanding into Uber’s existing markets. That they are beginning to do so successfully is a very worrisome sign for Uber and the ride-hailing industry in general. These mergers and acquisitions were supposed to have rationalized competition by carving out regions for each company. What happens if these multi-billion dollar companies begin to compete in Uber’s markets?

How this may complicate Uber’s stance in India

This dynamic further complicates the math for Uber’s investors. Before, it might have been easier for Uber and/or its investors to imagine a scenario where Uber simply exits India by selling its local business to Ola, its primary competitor in the country. However, now they have to wonder if allowing someone else to consolidate India creates just another $60bn competitor that will eventually expand into other parts of the world, just as Didi and Grab might be doing. After all, Ola is already in Australia, UK and New Zealand and rising through the app store rankings quite quickly.

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What does that do to Uber’s motivations & plans to compete in India? Will Uber be willing to suffer bigger losses in this market than investors are willing to endure? These are just some of the questions that make it even more difficult for investors to assess Uber’s investment prospects. Interestingly and perhaps coincidentally, we also observed Uber’s download rank in India inching up slightly against Ola’s starting in February of 2019, which isn’t something we observed previously since we started collecting the data in November 2018.

Race to acquire local players?

This dynamic also adds an interesting take on Uber’s recent acquisition of Middle Eastern ride hailing app Careem. As we highlighted previously, Careem had been competing very successfully against Uber in the Middle East. What’s notable about this deal was that Didi actually was already an investor in Careem. Given that Didi and Grab are now showing clear intent to and signs of success in encroaching into Uber’s markets, it creates an incentive for each of them to acquire as many of the “local leaders” as possible: Uber wants to make it as difficult as possible for others to expand into new markets, lest it face more Lyfts—large and well funded competitors—around the world), while acquiring a local leader might be the easiest way for those those competitors to find new growth engines, especially in relatively young markets like Latin America and Africa.

Chinese ride-hailing giant Didi is “hot on the tail” of US rival Uber in Mexico, according to a new report, as competition in the sector heats up amid aggressive expansions into new markets.

In November and December Didi was the most popular travel app in Mexico’s Apple App Store, with Uber coming in second. Since then, the Chinese company has ranked second according to an analysis by research company ValueChampion. “Didi has been hot on [Uber’s] tail in Mexico just as Lyft has been in the US,” Duckju Kang, ValueChampion CEO said in the report. Didi launched its services in Mexico in April 2018.

Uber drew attention to the competition with Didi in its IPO prospectus, which it filed on April 11, saying that the Chinese company had “made significant investments to gain or maintain category position in certain markets in Latin America.”

Didi has faced scrutiny in China after two passengers were killed by their drivers on separate occasions last year. The incidents took place on the company’s carpooling service Hitch, which has subsequently been suspended indefinitely. Regulators have since tightened their grip on the ride-hailing sector by imposing stricter rules. Didi has responded by implementing more stringent driver background checks, while various cities require drivers and cars to be registered in the city in which they operate. The result is a decrease in the pool of available drivers.

Didi reportedly lost RMB 11 billion (around $1.5 billion) in 2018, almost five times higher than its 2017 losses of $400 million. The company recently revealed that nearly one-third of its commission revenue was spent on driver subsidies in the fourth quarter of 2018.

To make up for losses at home the company has been expanding aggressively around the world. Didi’s Japanese joint venture with Softbank will expand to 13 cities in the country following its launch in Osaka last year. The company has sought to take on Uber globally, but most notably in Latin America. Along with operations in Mexico, both companies are competing in Brazil. Didi is also seeking drivers in Colombia and has advertised for jobs in Chile and Peru.

“A combination of high valuation, a lot of capital and difficult competition in local markets creates an imperative for these companies to expand into other markets in order to justify their valuations with better growth prospects,” Kang said in the report.

Aside from being Didi’s competitor, Uber is also a shareholder. The US company sold its operations in China to Didi in 2016 in exchange for an approximately 18% stake in the company. According to its IPO prospectus, Uber estimates its holdings in Didi amounted to around 15% as of September 2018.

The conflict between Didi and Uber has not only manifested itself in a battle for market share, but also in investments. In March, Uber acquired Careem, a ride-hailing service that operates across the Middle East. Didi had invested in the service prior to Uber’s acquisition. The move highlights Uber’s intent in making it as difficult as possible for competitors to expand into new markets, according to ValueChampion, thereby cutting off possible new revenue streams.

Ride-hailing giant Didi will set up a team of 2,000 service staff to increase its focus on offline driver management and support, the latest in a series of attempts to improve safety for both drivers and passengers on the company’s platform.

Fu Qiang, CEO of Didi’s Ride-hailing Business Group, said in an open memo to its drivers that the company aims to “help drivers solve the problems they encounter in their work,” while soliciting their feedback.

“We firmly believe that only by serving the driver well can the driver serve the passenger well,” Fu said.

The company said it would continue providing its drivers with safety training, which Didi hopes will enable them to protect themselves while “providing passengers with safer and better service,” according to Fu. In March, a Didi driver was murdered by a passenger in the central Chinese city of Changde, calling into question the safety of drivers as well as passengers. The incident followed two others in which drivers were targeted in 2017 and 2018.

Didi’s safety work has so far mainly focused on passengers, following the high profile murders of two Didi users on separate occasions in 2018. The company’s safety features include a driver-passenger blacklist function, emergency contacts, an in-trip panic button, and facial recognition systems that link a driver with a vehicle, among others. The company also pledged to spend $20 million on customer service in the wake of last year’s murders.

Didi CEO Cheng Wei said in an internal meeting in February that the company planned to lay off 2,000 employees, or 15% of its workforce, following a restructuring that aimed to improve safety and compliance. Sources told TechNode at the time that Didi planned to hire an additional 2,500 employees following the layoffs, which included headcount for offline driver management.

As Didi faces tougher regulations governing its drivers at home following the murders, the company has sought to expand its footprint abroad. Latin America has become a key battleground for Didi as it seeks to take on international rival Uber. The company has launched operations in Mexico and Brazil, with plans to expand to Peru, Chile, and Colombia.

Ride-hailing platform Shenma Zhuanche has called out US electric vehicle (EV) manufacturer Tesla for quality issues, claiming that problems with the automaker’s vehicles have cost the company up to RMB 6.5 million (around $965,000).

With nearly 280 Tesla vehicles in its fleet, Shenma asserts that it is the largest buyer of the company’s vehicles in the Asia Pacific region. However, Shenma said in a post on microblogging platform Weibo on Friday that 20% of the Teslas it owns have had electromechanical issues.

The company also claimed that Tesla’s after-sales service is “unsatisfactory,” and inefficiency when dealing with complaints has directly impacted its services, with the average disruption time from repairs and maintenance lasting 45 days.

Shenma said Tesla’s after-sale service did not meet its needs because the EV manufacturer does not have enough service stations or vehicle parts available in China.

Tesla refused to comment when reached by TechNode.

Shenma has subsequently posted three ads on the Thompson Reuters building located in Times Square in New York City to draw attention to the issue.

Telsa faced scrutiny in China last week after one of its vehicles caught fire and exploded in a parking garage in Shanghai. Following the incident, the hashtag “Tesla self ignites” (our translation) went viral on Weibo, with related posts viewed 110 million times as of Sunday morning.

Tesla CEO Elon Musk took to Twitter to defend the safety of EVs shortly after the incident, saying there are “over a million combustion engine car fires” a year.

Shenma’s complaint and last’s week’s fire come at a sensitive time for Tesla. The EV company has been working to boost flagging sales in China. Tesla missed its expected revenue for the first quarter, earning $4.5 billion of an anticipated $5.2 billion. The company’s share price fell to $235 by the end of the day Friday from $258 when it reported its first-quarter results on April 24.

Shenma is aimed at the higher-end market and operates a fleet of new energy vehicles, including Teslas and BMWs, among others. According to the company’s website, it offers its services in major Chinese cities including Shanghai, Shenzhen, and Guangzhou.

Update: This story has been updated to reflect Tesla’s response to Shenma’s claims. 

美团打车在上海、南京上线聚合模式 将试点更多城市 – Sina Tech

What happened: Meituan Dache, the ride-hailing arm of Chinese lifestyle services platform Meituan-Dianping, expanded its service offerings Friday using partnerships with a number of ride-hailing peers including Shoqi Limousine & Chauffeur, Caocao Chuxing, and Car Inc. in Shanghai and Nanjing. Under the deal, Meituan Dache users in these two cities are offered an extended range of ride services to choose from, either from Meituan Dache’s own fleet of drivers or those of its partners. The current partnership focuses on improving user experience and won’t involve any subsidy campaigns, according to Chinese media.

Why it’s important: Following a 57% jump in operating losses in the fourth quarter of 2018, the Chinese food delivery giant is exercising more prudence for business areas beyond its core food delivery service this year. The push into transportation, an area that Meituan bet on heavily last year with its Mobike acquisition and ride-hailing services, has slowed. Following the murders of two passengers by Didi drivers last year, Meituan Dache suspended its expansion in September, then Mobike shut down some of its Asia businesses in March. Building an alliance with smaller industry players is a way for Meituan Dache to better position itself against Didi’s dominance. The strategy is nothing new, though. Didi used a similar tactic when it built an “anti-Uber” alliance with Lyft, Singapore-based Grab Taxi, and India’s Ola during its heated battle with Uber.

Correction: This article has been corrected to reflect that the service was first launched in Shanghai and Nanjing instead of Shanghai and Beijing.

滴滴与全球顶级自动驾驶研究联盟BDD达成战略合作 – TechNode

What happened: At a conference on Thursday, car-hailing titan Didi announced that it had formed a strategic partnership with Berkeley DeepDrive (BDD) Industry Consortium, an initiative hosted at the University of California, Berkeley. Through industry-academic linkups, BDD conducts research in the fields of computer vision and machine learning. According to Didi, the partnership will involve research and applications in the field of smart vehicles, training, and academic exchange. BDD has already partnered with Tencent, Huawei, Baidu, and Meituan-Dianping in addition to international auto brands.

Why it’s important: According to its official website, much of BDD’s research is linked to autonomous driving, suggesting that the partnership will support Didi’s ongoing efforts in applying the technology to its business. As of last February, the ride-sharing company was designing its own software and conducting small-scale tests on city roads in China. In July, company CTO and co-founder Bob Zhang also spoke of a mixed model that would allow the company to dispatch self- or human-driven cars as needed. Didi’s ambitions may be held back by its business model, however; in addition to a difficult 2018 following the murders of two passengers, it recently revealed that its spending on driver subsidies may not be sustainable.

Didi-SoftBank taxi-hailing JV expands to 13 cities across Japan – Reuters

What happened: Didi-Softbank joint venture Didi Mobility Japan has launched its taxi-hailing services in Tokyo and Kyoto and will expand to 13 cities across Japan. The service initially landed in Osaka last year, targeting Chinese tourists and residents alike. The company joined forces with taxi firms as it sought to take on rivals backed by Sony and Toyota.

Why it’s important: Didi has been pushing to increase its presence internationally as it faces regulatory difficulties and driver shortages at home. The company this year plans to focus on internationalization and aims to take on rivals like Uber in international markets. Didi this week began recruiting drivers in Colombia as it pushes ahead with its Latin American expansion plans. However, the situation is different in Japan, where the company cannot offer ride-hailing services, as they are effectively banned. Instead, Didi has partnered with taxi operators.

Ride-hailing giant Didi revealed a glimpse at its commission rates and cost structure on Monday in a question-and-answer post published on its platform to address criticism for its cash-burning business model.

Nearly one-third of its commission revenue was spent on driver subsidies over the fourth quarter of 2018. Operating costs were roughly equivalent to 21% of total fare revenue from its private car hailing business during this time, Chen Xi, executive president of Didi’s Ride-sharing Business Group, said on Monday. Meanwhile, fourth quarter average commission rate was 19% of fare revenue, and the 2% difference was recorded as operating losses.

Chen stressed the continued losses could not last long, promising more efforts on cost reduction in order to “run businesses in a sustainable way.”

Additionally, driver subsidies accounted for 7% of total fare revenue during the same period, the company said, explaining that driver incentives were a critical tool to meet market demand during the peak times.

This was the first glimpse of Didi’s internal finances as questions mount about its fiscal viability as well as safety on its platform. According to an internal file obtained by Chinese media, the Chinese ride-hailing firm recorded a loss of RMB 10.9 billion (roughly $1.48 billion) in 2018, nearly five times the reported $400 million in losses booked in 2017.

Didi had expected 2018 to be a profitable year, according to Chinese media reports in March 2018 citing industry sources. But by October, following the murders of two female passengers in May and August, its priorities shifted to security, according to a corporate executive cited by the Wall Street Journal.

Global ride-hailing giants share a common problem of huge losses despite robust commission revenues, as competition in the worldwide ride-hailing market remains intense. Uber reported $3.03 billion in operating losses in 2018, and has run at a loss for three consecutive years beginning in 2016, according to its SEC filing from earlier this month. Its core ride-hailing business had a 22% commission rate over the past year, and the US ride giant continues to offer subsidies to drivers to gain market share around the world.

China’s Didi recruits Colombian drivers ahead of Bogota launch-Reuters

What happened: Ride-hailing giant Didi is recruiting drivers in Bogota, the capital of Colombia, as it prepares to launch its services in the country. Didi said in a statement that it hopes it can “meet the market’s expectations” as it recruits drivers with “an attractive offer.” The company did not give any indication as to when it would launch its services.

Why it’s important: Didi has identified Latin America as a critical battleground in its attempts to take on international rival Uber. The two companies are already going head-to-head in Mexico and Brazil, where Didi has attracted drivers with higher pay and bonuses. The move also highlights Didi’s efforts to offset issues its faces in China, including stricter policing of its platform. The company has already moved some of its senior executives to Latin America to lead its expansion in countries including Brazil, Colombia, and Peru. Uber is popular in Colombia, but illegal, with drivers risking a 25-year license suspension if they are caught working for the platform.

Ride-hailing operator Didi Chuxing has launched an online financial management system for auto leasing and fleet companies in China, the company announced on Thursday.

“Quanju” allows Didi’s auto partners to manage leasing accounts and financial plans, as well as access risk control and data analytics tools. The ability to monitor a vehicle’s operation, performance, and maintenance in real-time means that risks can be identified and improvements implemented more efficiently, said Liu Xiaoyu, head of Didi financial services operations in China.

Facilitating the operation of leasing and fleet companies will help Didi better manage its overall costs. “Mobility services providers like Didi need to manage the costs for operating the vehicle fleets… to deliver profitability for them and the drivers,” said Bill Russo, founder and CEO of advisory firm Automobility told TechNode.

“If drivers bear the burden of the car payments, insurance, and maintenance as individuals, they will not be able to get as good a price as Didi who can leverage their size to create economies of scale,” Russo added.

Didi expects the new system to serve 1,500 leasing partners in its network by the end of 2019. The ride-hailing operator has been focusing on auto services for the past few years, having set up Xiaoju Automobile Solutions in 2015. It stated in August that it planned on injecting $1 billion into the auto services division. Xiaoju, which provides services including auto leasing, car maintenance, and gas station services, has a gross merchandise value exceeding RMB 60 billion (around $8.79 billion).

However, Didi’s move into ride-hailing finance is relatively new. In January, the company began offering financial services including insurance, automobile financing solutions, and payment services to riders, drivers, and car owners on its platform. Didi has around 550 million users and 31 million drivers on its ride-hailing app, according to the statement.

A move into financial services isn’t uncommon among tech titans in China. BAT (Baidu, Alibaba, and Tencent) and JD.com all have been cultivating their own fintech businesses.

Didi’s new found interest in finance may also help to expand its revenue stream, which is especially critical at a time when its main ride-hailing business is facing increasing public and government scrutiny following passenger murders last year.

A Didi driver has allegedly been murdered by a passenger in the central Chinese city of Changde, once again drawing attention to safety standards on the ride-hailing platform.

The incident occurred early Sunday morning when a 19-year-old suspect stabbed the driver, surnamed Chen, before disembarking, according to law enforcement in the city.

Police said that the suspect turned himself in shortly after committing the crime.

“We have formed an emergency response team to fully cooperate with police while sending representatives to visit the family of the vicitim,” Didi said in a Weibo announcement (in Chinese). A Didi spokesperson told TechNode that the driver worked for the company’s Express service.

The incident follows Didi’s increased focus on safety after it experienced public outcry and government censure after two passengers were killed by their drivers on separate occasions last year. Those occurrences took place on Didi’s carpooling platform Hitch, which has subsequently been halted indefinitely.

This is not the first time a Didi driver has been killed by a passenger. In 2017, a driver surnamed Ao was killed by 22-year-old passenger Li Qingbing in Foshan, a city in the southern province of Guangdong. Li later appeared in court and pleaded guilty to the crime. A year later, another driver was killed in Guizhou province after being robbed of more than RMB 2,000 (around $300). His body was later found under a bridge.

Didi has implemented a number of safety upgrades, including a panic button for passengers and a driver-passenger blacklisting function. According to an announcement last week, nearly 140 million people have added an emergency contact to their Didi app. However, most of the focus has fallen on passenger safety.

Additional reporting by Jill Shen. 

More than 500 individuals have been arrested for using Didi’s ride-hailing platform for fraudulent activity using stolen personal data.

In a work report released Thursday on WeChat (in Chinese), Didi confirmed Chinese police apprehended suspects in 25 cases during 2018, the latest in a series of measures to ensure compliance on its platform. “Security, rather than growth, has been the most crucial target for Didi,” the company said in the report.

The perpetrators allegedly took advantage of a system that Didi uses to pay its drivers prior to receiving payment from customers. The suspects registered for Didi user accounts with stolen personal information, including mobile phone numbers that weren’t tied to an ID and fake payment credentials. They then posted ads online offering Didi trips at reduced prices. Internet users respond to their postings and paid the fraudsters for the trip, though no money ever reached Didi.

The arrests follow Didi’s claims that it removed nearly 140,000 fraudulent driver accounts from its platform in 2018. The ride-hailing giant said the unqualified drivers had posed “severe threats to users’ safety.” Previously, Chinese media reported that individuals with criminal records could register to be drivers on the platform using fake driver’s licenses and IDs, which could be bought for RMB 1,000 (around $150).

The cleanup forms part of a larger move as Didi seeks to go “all-in”  on security. The company has revamped its platform following the murder of two passengers using its carpooling service Hitch last year. Since the incidents, Didi has faced mounting public pressure and government scrutiny and halted its Hitch service indefinitely.

In response to the concerns, Didi launched or upgraded a host of security features, including a panic button and driver-passenger blacklisting function. Didi’s mobile application has been updated 15 times since September. By March, more 138 million people had added an emergency contact to their app, Didi said.

Correction: This article has been corrected to reflect that the suspects used stolen personal data to register for Didi accounts. They did not sell Didi user data as was previously reported. 

Ride hailing platforms under spotlight as China’s transport watchdog slams ‘one sided’ pursuit of traffic, subsidies to achieve growth – South China Morning Post

What happened: Chinese vice minister of transport Liu Xiaoming criticized ride-hailing companies’ “one-sided pursuit” of platform growth and investor funding at a briefing on Thursday. He pledged industry overhauls and the promotion of “healthier development” to better protect the interests of passengers and drivers. Liu also denounced prioritizing rapid growth over sustainable business models. In response to a question about industry leader Didi, he said authorities have “taken note” of the company’s workforce reorganization, as well as its attempts to improve both user safety and service.

Why it’s important: After two Didi carpool passengers were murdered last year, China’s transportation ministry undertook industry-wide inspections. Didi took action as well, implementing a slew of safety measures and suspending its popular carpool service indefinitely. These setbacks no doubt contributed to the major losses Didi suffered last year. CEO Cheng Wei has acknowledged (in Chinese) the company’s inability to achieve profitability, and the company is planning a large-scale reorganization. While Liu appeared to approve of Didi’s latest efforts, his comments also indicate his caution towards the industry in general. For the near future at least, official scrutiny and regulation of China’s ride-hailing industry will continue.

Ride-hailing platform Didi is cutting employee perks as it seeks to limit internal spending, a move that comes shortly after the company’s CEO announced plans to lay off around 2,000 employees.

Didi is slashing meal subsidies at its cafeterias, while increasing the prices of some goods. In addition, gym benefits and late-night snacks have been canceled, and funding for staff clubs is being cut. Workspaces at the company are also being made smaller. The policy came into effect on Monday.

News of the cuts began circulating on Chinese media over the weekend, detailing the extent of the reductions in a screenshot of a document that was sent to employees. In the internal memo, the company said the new policy is being implemented to “better save on internal expenses.”

A Didi spokesperson confirmed that the company had recently “made adjustments” to its employee perks, adding that it has “no plans to make any major cuts.”

The cutbacks come shortly after Didi CEO Cheng Wei told employees in an internal meeting that the company this year intends to lay off 15% of its workforce, amounting to around 2,000 people. Cheng said that the layoffs were a result of a reorganization plan announced in December and a performance review. He also said that Didi intends to an additional 2,500 employees in 2019 to focus on safety, compliance, offline driver management, and internationalization.

The news followed rumors that Didi lost nearly RMB 11 billion in 2018. In September, Cheng said that the company had “never achieved profitability.” Three months later, the company slashed its employees’ year-end bonuses in half, citing the firm’s poor performance in 2018.

According to Chinese media, Didi is offering generous severance packages, amounting to an employee’s annual income divided by 12 plus two months’ salary. Anonymous Didi employees posted on Chinese professional networking platform Maimai that “everyone wants to be fired after they became aware of the scheme.” The posts were widely shared on microblogging platform Weibo.

Didi has faced increased scrutiny following incidents in which two female passengers were murdered by their drivers while using the company’s carpooling platform Hitch. One of the two drivers was sentenced to death in early February, while the body of the other alleged murderer was found in a river following the incident.

An investigation by Chinese authorities at the company’s headquarters found that Didi’s Hitch service had “serious safety hazards.” The service has been suspended indefinitely.

Editor’s note: A version of this post was previously published by ValueChampion, a research firm that aims to help consumers make smarter decisions with their money.

Ridesharing companies are starting to come to the public market in 2019. With Lyft planning an IPO in March, and Uber and Didi also preparing for an IPO this year, it’s important for interested investors to understand the competitive dynamics in this industry around the world.

A number of major players around the world have raised billions of dollars to compete fiercely in their respective regions, a dynamic that has resulted in heavy losses for every company involved. For example, Uber reportedly lost $1.8 billion in 2018, while Didi also lost about $1.6 billion in China largely due to rider and driver subsidies, drawing concern about whether these businesses will ever generate enough profit to justify their high valuation.

We believe there are two main factors (outside of self-driving cars) that will determine the profitability of ride-sharing apps around the world. First, the competitiveness of each company’s market will heavily impact their profit levels. If markets are maturing and a clear leader emerges, profitability will gradually improve as smaller players find it more difficult to compete on subsidies alone due to scale differences.

Secondly, the funding environment will also determine how aggressively these companies can spend to compete. If funding is readily available, companies will not shy away from spending to grow and capture market share; if funding becomes scarce, they will conversely have to be more conservative about the way they subsidize rides.

To help interested investors to assess where each of the major players lie regarding these two factors, we surveyed each app’s popularity in 28 different markets to assess whether the extremely competitive ride hailing industry has begun to mature.

After a series of deals between Uber and its Asian counterparts, the ridesharing industry has become more mature in developed markets, with one player emerging as the clear winner in each region. For example, Uber has consistently ranked as the top travel app in the US and Canada, while Lyft has not been able to contest the number one spot. Similarly, Uber has solidified its leading position in most of Europe, Australia, Hong Hong, and Taiwan, with very distant number twos like mytaxi, BlaBlaCar, and Cabify in each region. This bodes especially well for Uber, as it is becoming the de facto leader in most of its major markets.

In many parts of Asia, we saw a similar trend. Ola comfortably maintained its top position in the App Store’s travel category, ahead of Uber for the past four months (though it is struggling to gain traction elsewhere), while Uber continues to lead markets like Taiwan and Hong Kong. In South Korea, Japan, and Russia, markets that have been extremely difficult for foreign companies, local apps like KakaoTaxi, JapanTaxi, and Yandex.Taxi have consistently reigned as ridesharing champions.

In many emerging markets, the picture isn’t as clear yet. For example, although Grab acquired Uber’s Southeast Asia business in eight countries and has been maintaining dominance in markets like Philippines, Vietnam, and Thailand, it is now facing stiff competition from Go-Jek, an Indonesian company backed by Tencent. In fact, their download rankings in each other’s home markets (Indonesia and Singapore) are neck and neck already, suggesting vicious competition between the two firms.

Also, Didi Chuxing in China has been facing difficulty in fending off competition from Dida Chuxing. In fact, Dida’s download ranking in the Apple App Store has surpassed Didi’s for most of the past few months. This is rather surprising, given that Didi has already consolidated the market significantly after merging with Kuaidi and acquiring Uber’s China business.

This seems to be largely driven by Didi’s series of PR disasters related to murders of its customers by drivers, a problem similar to the one that Uber experienced when its PR problems resulted in tougher competition from Lyft few years back. While Didi should be able to maintain its dominance if it solves this quickly, Dida could be a thorn in its side if it is able to exploit this opportunity to raise a large amount of capital.

In other regions around the world, Uber is still facing stiff competition from companies like inDriver (Colombia), Beat (Peru), Didi (Mexico), Taxify (South Africa and Nigeria), and Careem (Saudi Arabia and Pakistan), though it has been able to dominate some of big emerging markets, such as Brazil and Argentina.

Meanwhile, the VC market has shown an increasing appetite for mega deals. For instance, both total VC funding and average deal size nearly tripled from fourth quarter 2016 to fourth quarter 2018, according to Pitchbook, driven by massive financing rounds ranging in the hundreds of millions. Essentially, while availability of funding still seems ample overall, we’re seeing the rich get richer among successful startups. In other words, investors show clear signs of preferring leading companies over their competitors.

For ridesharing companies, this means that the winners will find it easier to raise money than their smaller competitors. With a bigger war chest, leaders can more easily tolerate losses while waiting for their smaller competitors run out of money, and could even consider acquiring them.

What to expect

For Uber, our findings are quite positive. It doesn’t have a real challenger in most of its major markets, and the dynamics of VC market is also favorable to the biggest player in the world. In such circumstances, it could potentially start reducing subsidies to increase its profitability; if it does, its smaller competitors (i.e. Lyft) have incentives to follow the leader, especially if they are concerned about their own finances. After all, even the US is now essentially a two-player market where one is significantly larger than the other.

This also helps to explain why Lyft is in a hurry to complete its IPO before Uber. Investors prefer the biggest player in an industry, so Lyft’s best bet might be to be the only publicly available stock in the space before Uber also becomes public. One possible implication of this rationale is that Lyft’s goal may not be to spend its newly raised capital aggressively to compete.

For other ride sharing companies, the future is still somewhat unclear. Grab and Go-Jek seem to be having a knife fight, funded by immense pockets (Tencent invested in Go-Jek, while Softbank invested in Grab). In India, Uber is still a close number two to Ola, creating uncertainty for the leader due to Uber’s stronger finances. However, the rumor that Uber is in talks to sell its UberEats business in India suggests it may pull out of the country as it has previously in China and SE Asia, leaving the market to Ola. Even in China, where Didi still has the biggest market share and war chest, Dida’s sudden rise suggests it may be able to capitalize on Didi’s 2018 PR disasters.

Last year was a rough one for the rental economy and mobility industries in China. With long lines of disgruntled customers outside Ofo’s Beijing office looking for refunds, sexual and physical assaults inside Didi’s cars, and the veil pulled away from Mobike’s numbers, 2018 saw the rubber hit the proverbial road.

No longer could marketers, PR armies, and executives continue to paint rosy pictures about the future of private transportation in China’s cities. For anyone on the ground, many of the claims had already inspired a mix of awe, confusion, and incredulity. If 2018 marked a breakdown in the industry, then 2019 is the year in which we’ll see if their attempts at repair will actually work.

A short ride down memory lane

Both Ofo and Mobike have been around for some time, but it wasn’t until the ride-hailing war was resolved that the industry was able to pick up speed.

Before 2012—when Didi and Kuaidi were both founded—getting around in a Chinese city was not easy. The intrepid intracity traveler had various options: bus, subway, cab, or unlicensed and illegal private cars (heiche, literally “black cars”). None were convenient.

Back then, the subway was less developed and stations were sparse. Deciphering bus maps required intimate knowledge of the city and its neighborhoods. Hailing a cab required a certain finesse as well as an utter lack of regard for other commuters as everyone jockeyed for position on the road; cab drivers, for their part, cared little for fairness, only concerning themselves with the direction and duration of the ride. Black cabs were even worse: overpriced and potentially dangerous. The demand for transport was exponentially higher than the supply and the suppliers knew it.

One night, as my wife and I were leaving a bar at Chaoyang Park’s west gate—a formerly hip and happening place—we discovered it had snowed quite heavily while we were inside. The subway was too far away by foot and most buses had already stopped service. Cab drivers in Beijing are notorious for abandoning the roads during inclement weather. We were stuck. It wasn’t until a good Samaritan gave us a ride to a busier road that we were able to find a cab home.

With the increasingly ubiquitous mobile internet—Xiaomi had launched their first smartphone in 2011, one of the first affordable ones in the country—the mobility industry was ripe for disruption. Unlike Uber, however, both Didi and Kuaidi started not as disruptors of regulation. In countries like the UK and France, Uber’s biggest challenge lay in regulatory frameworks that protected cab drivers but disadvantaged passengers. The American company became notorious for flouting their disregard for regulators and developed a reputation for being hard to deal with. In China, however, Didi and Kuaidi disrupted the cab market by working with cab drivers directly, then signing agreements with cab companies—some of which were state-owned—and then only later launching their private car-hire services.

Fast-forward to 2015: Didi and Kuaidi together controlled much of the market, but after a protracted subsidy war—offering discounts for riders and extra cash for drivers—the companies combined forces in order to face off against the foreign invader, Uber, who had entered China in 2014. After yet another subsidy war, subsequent fraud by drivers, new laws requiring government access to data, increasing compliance costs, and the rising barrier of regulatory approval, Uber raised the white flag in 2016 and sold their China operations to Didi.

Bike rental’s flight of fancy

Founded in 2014, Ofo launched in 2015 as a bike-sharing company on Beijing’s Peking University campus. China’s universities tend to be quite large and inconvenient to travel through. Ofo created a platform where students could share their idle bikes—for a fee—with classmates who needed to get across campus.

Mobike, on the other hand, launched in Shanghai in 2015 as a one-sided rental platform. Unlike Ofo, which had been co-founded by students, Mobike was established by seasoned professionals, including a former executive at Uber China.

After the ride-hailing war had been decided, investors and tech giants alike were looking for the next mobility play, with media dubbing both Ofo and Mobike as the “Uber of bikes.” The money poured in and, just as with any boom cycle in China, both companies competed fiercely for users, suppliers, and mindshare. Unlike in previous booms, however, these products were all offline and required significant investment to manufacture, deploy, and maintain. This didn’t stop both companies from claiming stellar numbers for both user numbers and rides. They remained coy, however, about the number of bikes on China’s streets, in order to conceal the true cost of their operations and to avoid potential dust-ups with municipal regulators over the externalized management costs.

We now know that these numbers were actually quite far from the truth. In 2018, Meituan Dianping went public in Hong Kong. As they had just purchased Mobike in April of the same year, we got a glimpse of the real story: Mobike’s previous claims were 70-75% higher than what was reported in Meituan Dianping’s IPO prospectus. We don’t have that kind of visibility into Ofo’s operations because they are not a public company and have chosen to remain opaque, but we can assume that they are much worse.

Didi in danger

The year 2018 was also a rude awakening for Didi. Established players from other industries began encroaching on the market. Local governments began making noise about the company’s effective monopoly. Worst of all, the public lost most of its trust in the company. The first murder of a Didi passenger was a tragedy but widely seen as a fluke for a company with few previous problems. The second was a wake-up call.

The mask was pulled off to reveal a company completely unequipped to deal with safety issues, especially for female passengers. Not only did they outsource all customer service—with the safety-reporting mechanism between the call center and Didi operations a complete failure—but the service where both murders occurred had been advertised as a place for male drivers to pick up female passengers, literally and figuratively. The former head of Didi Hitch, the carpooling service which saw the most problems, even went on record as calling it a “sexy application scenario.” On top of that, investigations revealed that assaults by drivers on Didi’s platform were much worse than previously thought.

Chinese companies, in a regulatory environment where many rules go unenforced, do not have a good track record of protecting their customers. In order to eke out margin, stay competitive and grow, companies in both tech and traditional sectors have skimmed and cut as much as possible. For a company like Didi, this degree of negligence has pushed them to the brink. As of now, the company is rumored to face losses of RMB 11 billion (around $1.6 billion) for 2018 and looks to be laying off up to 2,000 people. However, unlike Ofo, they actually have a chance to pull out of their current nosedive.

Didi claims to be implementing strategies that will allow it to do a U-turn and get out of the dead-end in which it finds itself. The company has announced that not only will they hire an additional 2,500 people for core business units, but that they will also increase their efforts in South America and bolster their efforts to improve rider safety. They’ve even gone so far as to call it an “existential” moment for them, one that could make or break the entire industry— referring to themselves, one would assume, since they make up most of the ride-hailing industry in China.

Being on top definitely does have its perks: better access to talent, funding, and regulators. However, it also means bearing the brunt of criticism, scrutiny, and the cost of reform. Didi, like other “sharing economy” startups, did not take safety seriously until it was too late, and even then the problem proved to be much deeper than we thought. Didi’s leadership, a pedigreed bunch of Alibaba, Goldman Sachs, and Uber alumni, have shown they know how to weather serious storms. We’ll just have to wait and see whether they make it through this one while also protecting the public at the same time.

Following the reports of lay-offs and heavy losses, ride-hailing company Didi is rumored to be offering downsized employees large paychecks, sparking a scramble to be fired.

Tencent Tech (in Chinese) cited anonymous employees as saying the package is N+2, which equals to the amount of an employee’s annual income divided by 12 plus two monthly salaries. The actual reward was said to be “far more than three monthly salaries,” as not only basic salary but annual bonus was also included in the calculation of annual income.

Update: A Didi spokesperson told TechNode that the company rigorously follows regulations governing employment practices.

Rumors about Didi’s compensation schemes first came out of Chinese professional networking platform Maimai on Thursday and immediately spread through microblogging platform Weibo (in Chinese), with anonymous employees commenting that: “everyone wants to be fired after they became aware of the scheme.”

“Didi is the most genuine and generous employer I have ever been [employed by],” said an unnamed leaker, posting to Maimai as “a Didi Chuxing employee.” He added downsized employees were even allowed to remain in the company to the end of March to allow them time to look for new jobs.

In a nationwide public outcry and government scrutiny, Didi has faced mounting pressure to improve the safety of both drivers and passengers on its platform since the second half of 2018. This contributed to record-breaking losses of over RMB 10 billion (roughly $1.48 billion) in 2018, as the company invested more money to promote compliance by recruiting qualified drivers with subsidies to offset labor shortage.

Didi took a further step recently to lay off 15% of its employees this year, amounting to around 2,000 people, as the company announced non-core businesses would be re-evaluated and curtailed if necessary.

Meanwhile, Didi rival Hello Transtech announced on Weibo (in Chinese) on Friday that it had launched its carpooling service in over 300 cities across the country. The Shanghai-based mobility firm has been backed by e-commerce titan Alibaba since late 2017. It received nearly RMB 4 billion in the latest funding round led by Primavera Capital Group and Ant Financial in September.

Didi’s carpooling service Hitch has been suspended since September following the murder of two female passengers by drivers last year.

Update: This article has been updated after a Didi spokesperson provided comment on Feb. 26. 

Chinese ride-hailing firm Yidao Yongche has delayed the relaunch of an online cash withdrawal mechanism that would allow its drivers to get paid, breaking an earlier pledge to do so by Feb. 22.

“We have encountered a lot of unexpected incidents as the capital market cools down,” The Paper (in Chinese) cited Yidao as saying.

The news represent the latest in a series of financial woes for the company under its current backer, Taoyun Capital. Beijing-based investment company Taoyun took over Yidao from disgraced Chinese entrepreneur Jia Yueting’s technology conglomerate LeEco in June 2017. Jia is also the CEO of struggling electric vehicle startup Faraday Future. Taoyun is one of the main creditors asking Jia to pay off his debts.

Yidao sent a notice to drivers on Thursday evening, saying Taoyun had “provided billions of money” to keep its operations going. 

Taoyun’s president, Wen Xiaodong, announced earlier in January that Taoyun was looking for people to buy Taoyun’s shares in Yidao for half their listed value because, after Taoyun had helped resolve Yidao’s debt crisis to the tune of RMB 6 billion (roughly $900 million) over a two year period, Taoyun was struggling to keep Yidao running.

Yidao was reportedly forced to move out of the building where it is headquartered in Beijing on Tuesday, and the rumors about its going broke began circulating on Chinese media since then. Yidao dismissed the bankruptcy rumors, claiming it is looking for new offices in Beijing and that it would let drivers know immediately the location of the new offices.

Yidao said in December it hoped to relaunch the online withdrawal mechanism to drivers on Jan. 25. This was followed by another statement on Jan. 26 that delayed the date of such withdrawals to Feb. 22, as the company had been “assisting” its main shareholder Taoyun to solve the debt issues with its former owner LeEco.

Exclusive: China ride-hailing giant Didi plans Chile, Peru launches to take on Uber – Reuters

What happened: Chinese ride-hailing giant Didi intends to launch its services in Peru, Chile, and Colombia, according to job listings and a company official. The company has already moved senior executives to South America to lead its expansion in the region. Didi has begun looking to fill positions relating to advertising, crisis management, marketing, and business development.

Why it’s important: The move escalates the competition between Didi and its international rival Uber. The two companies are already battling for market share in Brazil and Mexico. Didi CEO Cheng Wei said at an internal meeting last week that the company will focus on internationalization in 2019. At the same meeting, Cheng announced plans to lay off staff in China, as the company deals with increasingly strict regulation following the murder of two female passengers using its platform last year. It also reportedly faced record losses in 2018, amounting to nearly RMB 11 billion (around $1.6 billion).

Chinese ride-hailing giant Didi will this year lay off 15% of its employees, amounting to around 2,000 people, a move that follows rumors the company made record-breaking losses in 2018.

Sources close to the company told TechNode that Didi CEO Cheng Wei made the announcement at an internal meeting on Friday, saying that the ride-hailing giant would cut headcount and that some non-core businesses would be re-evaluated and cut back if necessary.

Didi declined to comment when contacted by TechNode.

The move comes shortly after Didi was rumored to have made a loss of nearly RMB 11 billion (around $1.6 billion) in 2018. In December, Didi slashed its employees’ year-end bonuses in half, while executives received nothing, due to the company’s poor performance last year. Cheng said in an internal memo in September that Didi had “never achieved profitability” since its establishment.

Also in December, Didi announced a reorganization plan to improve passenger safety, while appointing two new executives to oversee emergency management. It also merged its car-hailing services into a single business to promote compliance.

At the meeting on Friday, Cheng said the layoffs are a result of the reorganization and a performance review

Sources said that the company plans to hire an additional 2,500 employees to focus on safety, compliance, offline driver management, and internationalization, among others. Didi is expected to end 2019 with around 13,000 employees in China, roughly the same as at the end of 2018.

The company has seen increased government and public scrutiny in the aftermath of two high profile safety incidents on its platform last year, in which two female passengers were murdered by their drivers while using Didi’s services. One of the drivers was sentenced to death earlier this month, while the body of the other alleged murderer was found in a river shortly after the incident.

A national-level investigation at the company’s headquarters following the incidents found that there were “serious safety hazards” in its carpooling service Hitch—the platform the drivers used to target their victims. The service has since been suspended indefinitely.

At the meeting, Cheng said that the entire ride-hailing industry had a long way to go before it achieved its security goals.

Chinese ride-hailing firm Didi is rumored to have lost of billions of yuan in 2018, as the company shifted focus from revenue growth to legal compliance, reports 36Kr (in Chinese).

According to an internal file obtained by 36Kr, the Chinese mobility giant recorded an annual loss of RMB 10.9 billion (roughly $1.48 billion) in 2018. It had also reportedly given to drivers subsidies totaling RMB 11.3 billion for the whole year.

Didi was not immediately available for comment when contacted by TechNode.

Previously, Chinese media reported in September that Didi founder and CEO Cheng Wei acknowledged its poor finance in an internal letter, saying Didi “never achieved profitability” since its founding 6 years ago.

Following the murders of two female passengers and a number of other safety incidents last year, China’s largest ride-hailing operator has been the subject of public outcry and government scrutiny. It has since removed non-compliant cars and drivers while also investing more money to recruit qualified drivers to offset the labor shortage.

Didi was once thought to be pursuing “a multibillion-dollar IPO” in the first half of 2018, Wall Street Journal reported April last year, citing an anonymous person close to the company. A company executive told Chinese media in October that “Didi now cares about nothing except security problems.”

China sentences to death driver who killed passenger of ride-hailing firm Didi – Reuters

What happened: A Chinese court has sentenced 28-year-old former Didi driver Zhong Yuan to death for murdering and raping a passenger in the eastern coastal city of Wenzhou last year. The court made the announcement on microblogging platform Weibo. Zhong pleaded guilty earlier this month.

Why it’s important: The murder was the second high-profile incident perpetrated by Didi drivers last year, resulting in fierce criticism of the company by both the Chinese government and public. Didi has since moved to remove noncompliant drivers from its platform and restructured in an effort to increase the safety of its services. Following a series of government investigations, Didi was found to have “serious safety hazards” in its carpooling business Hitch, the same platform the drivers used to target their victims. The service has been suspended indefinitely.

Didi Chuxing Mulls Layoffs – The Information (paywalled)

What happened: Chinese ride-hailing company Didi is reportedly mulling layoffs. While the move has not been finalized and figures may change, the company is looking to cut headcounts in some departments by as much as 20%. Staff from support departments including human resources and marketing will be the worst affected. The company currently has more than 10,000 employees around the globe.

Why it’s important: Didi, along with other ride-hailing and ride-sharing services in China, has had to deal with increased regulation following two high-profile murders of passengers that were using its platform. The company has since imposed and enhanced a number of safety features, but the incidents caused government and public backlash. As a result of tightening regulation, the pool from which the company can select drivers has shrunk. Didi has also fallen victim to China’s slowing economy. In December, the company cut its employees bonuses by 50% following its poor performance.

China created a unicorn every 3.8 days in 2018 – South China Morning Post

What happened: According to the Hurun Report, which also releases an annual ranking of China’s richest individuals, 97 new unicorns were formed last year. In total, 186 startups were valued at $1 billion or over in China. Tech giants dominated the list: Alibaba’s Ant Financial, worth RMB 1 trillion (about $148 billion) alone, ranked first, followed by Bytedance’s news app Jinri Toutiao at around half of that value. Didi Chuxing, priced at RMB 300 billion, was third. Combined, the three companies made up over one-third of Chinese unicorns’ combined valuation. In addition, the Hurun Report chairman said that “more than 70%” of the 24 unicorns that went public last year beat their pre-IPO valuations.

Why it’s important: Given the sheer number of Chinese enterprises valued at $1 billion or more, the term “unicorn”—meant to indicate such companies’ rarity—no longer seems to apply. But while it may no longer be a measure of exceptional growth, it does show that the trade war and an economic slowdown hasn’t stopped top companies from getting even bigger. In addition, live-streaming platforms like Douyin, known as Tiktok internationally, and Kuaishou, as well as the on-demand service sector as a whole, expanded at above-average rates. Despite the disappointing returns on companies like Meituan and Xiaomi after hot IPOs last year, there may be bright spots yet for China’s tech sector in 2019.

Chinese ride-hailing giant Didi will impose higher fares over the Spring Festival, as passengers will be required to tip drivers amid a nationwide driver shortage exacerbated by the national holiday.

In an open letter to its passengers, Didi has asked users to pay a “special Chinese New Year fee” to drivers when they book their trips between Jan. 28 and Feb. 10. The holiday tips range from RMB 1 ($0.15) to RMB 9, varying depending on location and date, and will be given in full to the platform’s drivers.

Didi is already short of drivers in major cities amid increasingly stringent regulations. However, it anticipates a further shortage driven by the Chinese New Year, when most drivers will take a holiday break amid increased demand.

The tip system will be applied to its major ride-hailing services—Express, Premier, and Didi-owned Uber China—in nearly 268 cities across the country.

Users in Beijing will pay the highest premiums, which will reach up to RMB 9 per trip from Feb.4 to Feb. 6. Shenzhen and Shanghai follow with highs of RMB 8 and RMB 5 respectively. Didi expects that the longest queues will occur between Chinese New Year’s Eve and first two days of China’s first lunar month (Feb. 4 to Feb. 6). The company said drivers will also be given additional subsidies, from RMB 2.8 to RMB 100 per trip, as a reward for working during the Spring Festival.

“We expect the request response rate [from drivers] to drop by 20% across mainland China as the nation goes into festival mode,” the company said in the letter. It added that users will be able to check average response rates from the previous day and peak hours for specific areas from Jan. 28.

In spite of the mounting pressure from authorities and the public following the murder of two female passengers by its drivers last year, the Chinese ride-hailing remains a dominant figure in China’s mobility sector.

Still, Alibaba-backed Hello Transtech is taking on them, planning to provide carpooling services in 10 cities by the end of January.

Ride-hailing giant Didi has hinted at the next possible upgrade to the company’s security features: requiring passengers to register their real names in order to use the platform.

“At-risk users cannot be identified and targeted immediately without a real-name system,” the company wrote on its WeChat account on Tuesday. Didi also said that without such a system there is little recourse for drivers if a passenger refuses to pay for their trip.

In a WeChat poll, the company invited netizens to share their views about whether real-name verification should be applied to passengers. As of 4 p.m. on Wednesday, nearly 90% of the 160,000 respondents indicated that they believe the feature should be extended to include the platform’s passengers.

The poll, which opened on Tuesday and will close early next week, also has more than 600 comments and thousands of public “likes.”

Didi has enforced real-name verification for its drivers since 2016, but this is the first time it has hinted at extending the measure to its passengers. Drivers are required to upload their driver license and vehicle registration when applying to use the platform. Nonetheless, unqualified drivers still spring up on the platform with the help of counterfeit licenses and fake IDs, according to Chinese media.

The company insists that drivers and passengers are strictly forbidden to access one another’s personal information. Still, some voters voiced concerns over privacy, worrying that their identities could be leaked or misused by drivers.

Didi created its online discussion platform in November 2018 as part of an initiative allowing the public to provide input on various topics. Past polls have included whether drivers should be able to refuse drunk passengers and if the owners of lost goods should pay fees to reclaim their items.

Following a poll, the company began testing a feature in the southern Chinese city of Shenzhen allowing drivers to cancel the trips of drunk passengers should they threaten the safety of the drivers or themselves.

“Users will receive messages which remind them to check if the drivers they meet are consistent with the license information,” a Didi spokesperson told TechNode. All drivers on its platform are required to pass a facial recognition each day before they start picking up passengers.

The company implemented the measure to enhance safety following the murder of 21-year-old flight attendant Li Mingzhu by a Didi driver in May 2018. The incident was followed by another murder in the eastern Chinese coastal city of Wenzhou in August.

China’s Waymo rival quietly launched an Uber-style app for driverless cars, making it one of the first to do so – CNBC

What happened: Chinese autonomous driving startup Pony.ai has launched a WeChat mini-program allowing users in the southern Chinese city of Guangzhou to hail autonomous taxis. The app was quietly released in late December. It allows passengers to hail the self-driving taxis from a pre-set location in the city’s Nansha District to other areas including Pony.ai’s offices and residential buildings, all of which are set by the company. Currently, only Pony.ai’s employees and a few VIPs can use the app.

Why it’s important: While rides are free, the company collects data during every trip, which helps to further enhance the capabilities of its autonomous driving systems. Pony.ai hopes to grow its fleet of vehicles from 20 to 100 in 2019, thereby further increasing its data collection capabilities. The company eventually want to scale the platform to create a new revenue stream—a move that could put it in competition with ride-hailing giant Didi.

Chinese bike-rental firm Hello TransTech will launch a carpooling platform later this month, our sister site TechNode Chinese reports, marking its latest expansion into China’s increasingly regulated mobility sector.

The company is currently recruiting drivers for the service. Applicants are required to submit information including their identification number and drivers license. Hello TransTech has promised prospective drivers that the approval process will not exceed 48-hours and that they can make RMB 2,000 ($300) a month.

The company announced its recruitment plan earlier this month on its WeChat account (in Chinese). This was followed by another announcement saying its carpooling service will be available in 10 cities—including Shanghai, Hangzhou, and Guangzhou—by the end of the month.

The move comes amid increased scrutiny of the mobility sector. Ride-hailing giant Didi faced mounting pressure from authorities to improve the safety of both drivers and passengers following the murder of two female passengers by its drivers last year. The company was forced to suspend its carpooling service Hitch following an investigation by regulators.

“It is the company’s top priority to ensure the safety of passengers and drivers,” a spokesperson from Hello TransTech told TechNode, adding that the company will provide 24-hour hotlines and full-time customer care for emergency situations.

Formerly known as Hellobike, Hello TransTech merged with state-owned public bicycle operator Youon Technology in October 2017. Two months later, it raised $350 million in a round of fresh funding led by Alibaba-affiliate Ant Financial. In September the company received nearly RMB 4 billion in a funding round led by Primavera Capital Group and Ant Financial.

In a bid to expand its operations, Hello TransTech partnered with Didi-rival Dida Chuxing in October, aiming to provide ride-hailing services to its users from within Hello TransTech’s app.

Didi Employees Involved in Over 60 Internal Corruption Cases Last Year – Caixin Global

What happened: Ride-hailing giant Didi said it dismissed more than 80 employees last year after its compliance staff found in excess of 60 cases of internal corruption. The employees were laid off for alleged “severe violations” of the firm’s rules, which involved cases of fraud, bribes, or information security breaches. The company handed over the former employees to police for suspected illegal behavior.

Why it’s important: Chinese tech companies have stepped up internal investigations in an attempt to stamp out corruption within their ranks. Tencent, Baidu, Xiaomi, and JD have all launched similar initiatives. Recently, super lifestyle app Meituan sent 90 of its and its partner companies’ employees to the police for suspected wrongdoing. Last year was a difficult one for Didi. The company faced increased public and government scrutiny following the murders of two female passengers who booked rides on its carpooling service Hitch. The company restructured and updated its safety systems in response.

Zhong Yuan, a 28-year-old driver for Chinese ride-hailing giant Didi, has pleaded guilty to the murder and rape of a female passenger in August last year, according to Beijing Youth Daily (in Chinese).

Zhong appeared in court in the eastern Chinese city of Wenzhou on Jan. 4. The trial was not open to the public and the court has yet to say when its decision will be made public.

The victim, a 20-year-old woman surnamed Zhao, went missing in Wenzhou’s Yueqing County in late August 2018, after hailing a ride on Didi’s Hitch. A friend reported to local authorities that she sent her a message pleading for help. Zhao’s body was found in a mountainous area nearby, and Zhong was arrested by police, later admitting his involvement in the crime.

When contacted by TechNode, a representative from Didi refused to comment on the case.

Last year, two high-profile murders by Didi drivers caused a nationwide outcry. Government officials also launched a series of investigations into the company’s safety mechanisms. The firm was found to have “serious safety hazards” in its carpooling business Hitch—the platform that the drivers allegedly used to target their victims.

In a separate case, a 21-year-old flight attendant Li Mingzhu was raped and killed in May 2018 after she booked a ride through Didi’s Hitch service. Li booked the trip at Zhengzhou Airport in China’s central Henan province. After the crime, the suspect, Liu Zhenhua, abandoned his vehicle and drowned himself in a river, according to police.

The company has since started to remove non-compliant drivers and vehicles from its platform and restructured to focus on improving passenger safety and promoting compliance.

According to court documents, Zhong was charged with rape and homicide. Prosecutors said he robbed Zhao to pay back gambling debts he had accumulated after lending money from online peer-to-peer loan platforms. Zhong also pleaded guilty to threatening another female passenger during an earlier ride. The passenger had filed a complaint with Didi.

Chinese ride-hailing firm Didi has launched a series of financial service products, highlighting its efforts to diversify its business lines amid increased government scrutiny.

The in-app features, which include access to funds for critical illness protection, are now available to all users across China. Users who join the program can access as much as RMB 500,000 (around $70,000) in protection from life-threatening conditions, including cancer, leukemia, and paralysis, Didi claims. Other services include wealth management, personal credit, and lending.

This is the first time Didi has showcased its financial services business to everyone on its platform. It previously announced the fintech business group at the beginning of 2018 after it was granted a payment license by fully acquiring a Beijing-based online payment enterprise back in December 2017 (in Chinese).

A Didi spokesperson told TechNode the products are set up to focus primarily on “gig economy workers” and their families. App users can pay around RMB 20 each month for medical insurance, which is provided by ZhongAn, a Hong Kong-listed Chinese online-only insurance company.

The company now also offers automobile financing solutions, including purchasing, leasing, trading, and financing services for new energy vehicles. Didi said the beta versions of these services were previously only available to Didi drivers and car owners.

Following the murders of two female passengers and a number of other safety incidents last year, China’s largest ride-hailing operator has been the subject of continued public and government scrutiny. Stricter regulations have forced Didi to remove from its platform both cars and drivers that don’t meet the required approval criteria. It recently announced that it would slowly decrease the number of orders served to non-compliant drivers.

In December, the company slashed its employees’ year-end bonuses by 50% due to less-than-satisfactory performance over the course of 2018, while executives received nothing. The company also restructured to focus on improving passenger safety and indefinitely suspended its carpooling service, Hitch.

Meituan Dianping Gets Green Light for Ride-Hailing Service in Beijing – Caixin Global

What happened: Meituan Dianping, a Chinese group-buying website for consumer products and retail services, received a permit to provide ride-hailing services in Beijing. Licenses were also given to two other businesses, namely Sogood and SH-ABC. This will add to the eight already operating ride-hailing platforms in the city. Meituan launched its mobility service in Nanjing late last year and later expanded to Shanghai.

Why it is important: Dominated by Didi, the ride-hailing industry has become increasingly saturated. Yet, Meituan’s expansion could mark a change in the power dynamic of the industry. As the company ventures to take on Didi in Beijing, there may be a renewed subsidy war between the established firms and the incoming company, resulting in a potential shift in users, whether it be temporary or permanent. Beijing’s attitude is welcoming of a competitive market, particularly given the Chinese government’s investigation into Didi over alleged monopoly allegations.

Chinese ride-hailing firm Didi will over time remove drivers and vehicles that do not meet the company’s safety requirements, the latest in a series of safety measures following an investigation by China’s transportation authority.

The company made the announcement last night as part of a new round of plans to increase safety on its platform. Didi said it would gradually reduce orders dispatched to non-compliant drivers until they no longer received any passengers.

The safety upgrades follow a high-profile investigation by China’s Ministry of Transport, which claimed that the company had “lost control” of its drivers and vehicles after a series of safety issues. It said Didi’s carpool service Hitch lacked adequate safety measures, which could result in significant hazards. The ministry vowed to fine Didi executives.

Last week, a former Didi driver was sentenced to death for the 2016 murder of a passenger in Shenzhen.

The company plans to report its progress in removing drivers and vehicles in the future as it is setting targets to meet compliance standards, which vary between regions and cities.

Didi said that it would also increase the amount of data shared between it and the government. Regulations stipulate that data including driver information, car locations, and routes should be shared. The country’s police database is already used for driver’s background checks.

The new mechanism will also involve the police for handling emergency issues, with a 24-hour hotline for law enforcement to gain access to information from Didi should a safety issue arise. Data mining and machine learning will be used to identify abnormal behavior, such as route deviations, order canceling, and cars pulling over.

The company has faced increased scrutiny this year following the alleged murder of two female passengers by Didi drivers. The incidents caused public outcry, forcing the company to overhaul its services, implement new safety measures including stricter background checks, and appoint a team in charge of emergency management.

It has also previously implemented a blacklist feature, enabling passengers and drivers to block each other, and piloted a function to cut down on bad behavior by drunk passengers.

Volkswagen China and Mercedez Benz have partnered to launch a premium ride-hailing service in Shanghai, signaling mounting segmentation in the crowded ride-hailing sector and increased competition in the high-end market.

Passengers in Shanghai can book one of 50 Mercedes Benz E200L vehicles via Volkswagen’s ride-hailing app, official WeChat account, and the company’s hotline. Volkswagen owns the three booking channels.

According to Chinese media, drivers wear suits while cars are equipped with WiFi, iPads, drinks, and umbrellas. The iPads double as a screen for displaying passengers’ names during airport pickups.

The companies have selected 50 drivers who previously served government officials and guests during events including the 2010 World Expo and Asia Pacific Economic Cooperation forum (APEC).

The Volkswagen-Mercedes Benz tie-up is an aggressive step into the high-end ride-hailing market eyed by global luxury car manufacturers. On Dec. 14, BMW launched its ReachNow service in Beijing and Chengdu. Shenzhou, Shouqi, and Didi Premium are existing players in the high-end field.

The move also highlights the growing trend by manufacturers to seek new revenue models. By the end of October, car sales in the world’s second-largest economy had dropped by 23% year-on-year. Meanwhile, September sales of Volkswagen’s joint ventures with First Automobile Workshop (FAW) and SAIC Motor dropped 5% and 9% year-on-year respectively.

Volkswagen was also reportedly in talks with Didi in April to manage a fleet of the Chinese ride-hailing giant’s for autonomous vehicle projects in the future.

In response the Volkswagen-Mercedes Benz partnership, Didi told TechNode that the company welcomes more players to the ride-hailing industry to provide diversified mobility services to users, without elaborating.

Employees of Chinese ride-hailing firm Didi will receive only half of their year-end bonuses, while executives receive nothing, the company’s CEO Cheng Wei announced at an internal meeting on Saturday, The Paper reports.

The bonus cuts come as a result of the company’s less-than-satisfactory performance over the course of the year, The Paper cites Cheng as saying, adding that most of the blame is held by its executives. The company’s annual bonuses can vary between two and six months salary, depending on an employees performance.

A Didi representative refused to comment on the matter when contacted by TechNode.

“Everybody is frustrated,” a company employee told The Paper. “We used to work overtime for a bonus. After the decision was made, we just didn’t care about [appraisals anymore].”

Didi has faced government and public scrutiny following high profile safety incidents on its platform.

Last week, a former Didi driver was sentenced to death for murdering a passenger in Shenzhen in 2016. The company refused to comment on the ruling.

Earlier this year, two female passengers in their 20s were allegedly raped and killed by Didi drivers while using the platform’s carpooling service, Hitch. The murders occurred in the capital of China’s central Henan province, Zhengzhou, and Wenzhou, a coastal city in the southeastern province of Zhejiang.

The murders led to users boycotting the service while the company temporarily shut down seven late night services for a week while it implemented new safety measures. The company’s app fell 53 places in the Chinese Apple App Store in the course of a week.

In September an inspection team consisting of 10 national ministries and commissions began an investigation at the company’s headquarters. The investigation found that there were “serious safety hazards” in its Hitch business. The service was suspended indefinitely.

Earlier this month, the company announced a reorganization plan for improving passenger safety on its platform. The company merged its car-hailing services into a single business unit to promote compliance, while appointing two new executives, including a chief safety officer and chief security officer, to oversee its emergency management.

A court in the southern Chinese city of Shenzhen has sentenced a former Didi driver to death. Pan Tujin was found guilty of robbing and murdering a passenger in the city on the night of May 2, 2016. His female victim, identified only by the surname of Zhong, was reportedly a teacher.

According to the official court notice, in April 2016 Pan set out to find victims to rob via Didi’s ride-hailing services. He bought “tools“ including stickers to disguise his license plate number, a knife, a mask, and sedatives.

A Didi representative told TechNode that the company has no comment on the ruling, adding that to date, police had cracked 100% of major criminal cases perpetrated via Didi’s platform.

The company also cited a report by China’s Supreme People Court that the crime rate of taxi drivers (including assault, smuggling, and driving dangerously) in 2017 was over 10 times that of ride-hailing drivers.

In early May, he picked up Zhong in Shenzhen’s Nanshan District. According to the court, Pan saw his opportunity in the lone female passenger apparently living in a high-end residential area. Local media reports he pulled over and forced Zhong to transfer him RMB 7,000 (around $1,000) via WeChat and Alipay. When Zhong struggled, Pan killed her and stole her belongings.

He was reportedly caught only 12 hours later by police and brought to trial in March 2017. Due to the defendant’s nervous breakdown, the hearing was adjourned to a later date.

Pan’s crime took place well before two high-profile murders of female passengers this year by male Didi drivers. Those incidents caused a national uproar and forced Didi to overhaul its services, implement a series of new safety features including more stringent background checks for its drivers, and undergo a corporate restructuring.

Days after a driver was robbed and murdered by his passenger, Didi also rolled out safety upgrades for drivers. China’s ride-hailing giant is being watched closely by both government as well as the public, and its actions may set a precedent for the rest of the industry.

China’s transport ministry said last month that the ride-hailing giant had “lost control” of its drivers and vehicles. It added that the company’s carpool service Hitch lacked adequate safety measures, which could result in significant hazards. It vowed to fine Didi executives after an investigation.

Chinese ride-hailing giant Didi has rolled out a series of features aimed at curbing bad behavior among drunk passengers, marking the latest security enhancement aimed at both users and drivers.

Drivers are permitted to report drunk passengers and cancel their trips should they threaten the safety of themselves or the driver. However, they must complete the journey if a drunk passenger’s behavior isn’t perceived as being dangerous.

The company implemented the policy in the southern Chinese city of Shenzhen’s non-premium services as a pilot project yesterday (Dec. 10). It will be soliciting feedback from drivers and passengers at the same time.

The company is also encouraging sober passengers to accompany drunk friends to reduce risks. A user’s emergency contact uploaded to their Didi profile will be contacted if needed. Drivers can also apply to have a passenger pay a cleaning fee should they throw up in the car.

Didi said the driver complaints and service charge applications would be stored for reference in future disputes.

The implementation of the new policy comes after a conference the company organized last month to discuss safety protocols, which included the opinions and proposals of 269,000 netizens. Before the rollout of the policy, Didi’s internal management team received around 30,000 drunk passenger complaints and reports from drivers nationwide daily, the company told TechNode.

The Chinese government and public lambasted Didi in the aftermath of the murder of two passengers. The company then scrambled to implement a number of updated safety features, including a voice recording function to keep in-car communication on record for dispute resolution, a blacklist function allowing passengers and drivers to block each other for 12 months, and an in-app panic button.

The company has also been increasing the stringency of its background checks for drivers. In Beijing, rules require that drivers and cars be registered in the city. Compliance with the policy has reduced Didi’s available workforce and led to some driver shortages.

China’s Didi restructures key units to improve safety following passenger deaths – TechCrunch

What happened: Chinese ride-hailing giant Didi announced on Dec. 5 a series of structural reorganizations to improve safety following the murder of two users. The company will merge Didi Express, Premier and Luxe, its car-hailing offerings into a single business unit. Its bike rental, designated driver, and public transport units are moved to a single entity. Two senior positions, a chief safety officer and a chief security officer, will be added to oversee its emergency management.

Why it’s important: The murder of two passengers in May and September has exposed Didi and China’s ride-hailing industry to increased scrutiny, both from regulatory authorities and the public. Didi Hitch, the carpool service the victims used will “remain suspended indefinitely” as the company revamps security measures. The reshuffle also allows the company to explore retail opportunities including car sales, maintenance, and loans to provide its drivers with extra services and support.

BMW to offer ride hailing services in China from December-Reuters

What happened: Germany’s BMW has obtained a ride-hailing license in Chengdu, the capital of Sichuan Province, through its wholly owned subsidiary in China. This makes BMW the first global automaker to launch ride-hailing services in the country. The company plans to push out the service in December.

Why it’s important: After the fierce competition witnessed by China’s ride-hailing industry since 2013, Didi has established itself as the largest player in the battlefield, holding between 90-95% of the market. However, Didi has never been short of new challengers, such as Meituan and BMW. More companies are entering the market in the belief that there’s room for growth in China’s ride-hailing industry. Consulting firm Roland Berger estimates that 40% of China’s taxi demand is unmet.

Beijing is investigating the merger between Didi Chuxing and Uber China regarding potential monopoly charges. This is likely to allow new comers to join the game, and foster legislation progress in the industry.

“We are now carefully looking into the case according to related law and regulation… Ride hailing is a new industry…which shows complicated and fast-changing competition,” Wu Zhenguo, head of China’s Anti-monopoly Bureau said during the State Council Information Office’s meeting with media (in Chinese) on November 16.

Wu added that China’s Anti-monopoly Law, which has been implemented for ten years, treats all parties equally regardless of nationalities and market status.

Criticism on the merger deal’s being monopoly has long been haunting the ride-hailing market in China, but there has been little substantial investigation.

On August 1, 2016, Didi formally announced their acquisition of Uber China. The deal lifted Didi’s total value to around $36 billion, but soon got the company into legal trouble for having “failed to declare the transaction.” Beijing then announced that this would activate anti-monopoly investigation.

After two years, in September, 2018, as no legal progress has been made, the Ministry of Transportation openly pointed out that the merger could be a monopoly. According to data cited by Yicai (in Chinese) in September, Didi Chuxing, after the merger, was dominating the ride-hailing market with more than 90% market share. As a result, Didi responded that the company welcomes more players to join the competition, as Didi alone cannot satisfactorily serve the huge market.

A possible reason for a delayed investigation, said lawyers close to the Anti-monopoly Bureau (in Chinese), could be the absence of proper legal definition of ride-hailing in China, which could help clarify nature of the services, and then accurately allow existing legal frameworks to come up with fair and lawful judgement.

Didi has not given any immediate response to TechNode’s inquiry by the publication of the article.

SoftBank to invest in Chinese bike-sharing firm Hellobike: sources–Reuters

What happened: On Wednesday, The Information published a report that Japanese conglomerate SoftBank is in talks to invest in Hello TransTech, formerly known as HelloBike. Reuters has since released a follow-up article stating that, according to inside sources, SoftBank and Chinese company Primavera Capital will take part in a new round of funding for the bike-rental startup. The goal of the fundraising is supposedly to raise another $400 million for the unicorn, which a spokesman said is currently valued at over $2 billion. However, representatives of Hello TransTech, SoftBank, and Primavera have not provided comment on the news of potential investments.

Why it’s important: To outside observers, it may seem surprising that SoftBank would want to invest in the increasingly cutthroat field of Chinese bike-rental. However, Hello TransTech has so far managed to muscle out competition by targeting smaller cities and they recently diversified by launching a ride-hailing service in September. Along with the support of high-profile investors like Alibaba, that may be enough for Hello TransTech to avoid the pitfalls of cash-strapped competitors like ofo, which it’s currently in talks to acquire.

Image credit: Tencent Video

According to Chinese media, Nanjing is home to a “car graveyard” of close to 1,000 vehicles. The brand-new cars are being stored in an industrial park as companies wait for the lifting of a local ban on certification for new rental and ride-hailing vehicles. Although not all the cars belong to ride-hailing platforms, photos and videos show that some sport the logos of Didi and Meituan.

Nanjing’s government first announced a temporary ban on new rental car licenses on April 19, but news of the restriction leaked two days beforehand, AI Finance & Economics reports. That led to a rush to buy and register vehicles, as Nanjing mandates that all additional ride-hailing cars must be new.

However, in August of this year, Nanjing leveled an additional restriction on the industry, stalling the processing of rental car certification for three months. Until that regulation ends on November 16, close to 1,000 new cars have been left idle in the Nanjing industrial parking lot.

Image credit: Tencent Video

Nanjing has been the site of fierce ride-hailing competition, boasting an unusually high ratio of some 20,000 cars for a population of around 8.3 million residents. Meituan launched a pilot “ride-share” program there this past February, heightening the competition among the seven platforms that once occupied the city.

The secretary of Nanjing’s local taxi association, Ling Qiang, told AI Finance & Economics that ride-hailing platforms’ tactic of offering discounts drove down demand for taxis significantly.

Meituan has since slowed its ride-hailing ambitions, and Nanjing government regulations have temporarily ceased the entry of new cars into the rental ecosystem. But the fight may not be over just yet. This past May, Didi’s number one competitor Dida Chuxing entered a strategic partnership with Nanjing’s taxi association. All of the city’s taxis can now be booked via Dida’s platform, with modest RMB 1-2 discounts available for online users. Dida doesn’t operate any non-taxi ride-hailing services there, however.

Although not a true “graveyard,” the Nanjing lot of unused cars brings to mind images of the sites around China where thousands of rental bikes have gone to die. The boom of the bike rental market has led to oversupply in many cities, as well as vandalism. Ride-hailing has yet to go the same way, although Nanjing’s limits on the number of rental cars may be a harbinger of things to come.

What happened: Chinese ride-hailing company Banma Kuaipao (斑马快跑) is now rebranded as “Banma Ride-hailing” (斑马网约车). Banma recently completed a new round of funding, raising RMB 300 million from QJY Capital. The company also signed a strategic partnership agreement with Zotye Auto, under which Zotye Auto will provide Banma with new energy and gasoline vehicles. The company plans to move its R&D and operation headquarter to Beijing from Wuhan in the near future for the purpose of recruitment.

Why it’s important: Banma has obtained 125 licenses in China—more than Didi Chuxing and many other competitors have. The company said it has been focusing on obtaining licenses in second and third-tier cities, while other competitors like Didi Chuxing, Shenzhou, Shouqi focus on first-tier cities. Banma is currently the fifth largest ride-hailing platform in China.

Dida Chuxing Turns Into China’s Second-Largest Web Driver as Cabs Come Back —Yicai Global

What happened: Ride-hailing platform Dida Chuxing has recorded a jump to 10 million daily active users (DAU) making it the second most popular service following market leader Didi Chuxing. Dida operates taxi hailing and carpooling services. After Didi’s safety scandals including two murders and a number of assaults on female passengers, Chinese are again turning towards taxis.

Why it’s important: Although the number of Dida users is still low compared to the 550 million users that Didi claims to serve, the rise of Dida shows that users have genuine fears over ride-hailing. Last month, China’s Ministry of Transport has discovered a string of safety issues with multiple ride-hailing platforms including weak emergency mechanisms. Didi has also found itself under scrutiny for its monopoly. On the other hand, Dida’s reach is rising. The company recently reached a partnership with Hello TransTech (ex-Hello Bike) allowing its users to hail taxis in 81 cities countrywide.

哈啰出行打车业务81城同步上线 接入嘀嗒打造多元出行平台-Sina Tech

What happened: Hello TransTech, formerly known as Hello Bike, has entered partnership with Dida Chuxing, an up-and-coming competitor of Didi Chuxing, to speed up its foray into the ride-hailing industry. The tie-up would allow Hello TransTech users to hail taxis in 81 cities countrywide, including Shanghai, Nanjing and Chengdu, the three cities where the company start piloting taxi-hailing service on October 11.

Why it’s important: China’s transportation industry is experiencing a swift change of power in both two-wheeled and four-wheeled mobility services. As Mobike being acquired by Meituan and ofo stuck in cash strains, Alibaba-backed Hello TransTech rise quickly to gain market shares through deposit-free services and integration with Alibaba’s online food delivery service Ele.me. The bike rental startup now tries to pivot into four-wheeled mobility through a partnership with Dida Chuxing. As the second-largest ride-hailing company in China, Dida’s daily active users ballooned to 10.2 million while Didi is suffering from scandals about rider safety and industry monopoly.

According to a Weibo announcement on October 10, Didi will test out a new blacklist feature on its ride-hailing app today (October 18). It’s part of an update that also includes improvements to existing options like the “one-click” panic button, emergency contacts, and warning against underage passengers. But unlike previous safety upgrades, which have mainly focused on passenger safety, the blacklist feature can also be accessed by drivers.

The option will be accessible from multiple pages within the app, from trip cancellation to complaint submission to reviews. After a passenger or driver adds someone to the blacklist, Didi will prevent them from being paired up again for 12 months.

As a staff member of Didi’s public safety department told China National Radio, being added to a blacklist can also affect other aspects of one’s in-app experience. Drivers who are featured on multiple passenger blacklists and are also the subject of complaints, for example, may be punished by the company. Meanwhile, passengers who are added to more than one list will have access to fewer drivers’ services in the future.

In its current stage of development, a blacklist status cannot be reversed.

As of writing time, a Didi PR representative had not yet responded to TechNode’s request for further information. The concept of a blacklist and its negative aftereffects, however, may sound similar to social credit systems that have sprung up across China in recent years.

In fact, the vice-director of the Research Center on Communications Law at China University of Politics and Law, Zhu Wei, told CNR that the “blacklist feature is an important component of creating a credit system” (our translation) among drivers and passengers. According to Zhu, both parties will be incentivized to avoid negative behaviors.

Fudan University’s Professor Zheng Lei, on the other hand, said that the measure has limits. While it punishes wrongdoers, the blacklist may fail to prevent crimes before they happen.

The feature is only the latest addition in a long line of safety features churned out by Didi after the murders of two passengers earlier this year. Past updates have included more rigorous background checks and a mandatory daily safety knowledge test for drivers, as well as an audio recording option for Express and Premier trips.

More recently, on October 16 Didi announced that it was recruiting 1,000 Party members to join the ranks of its customer service team. According to the company, it’s part of an effort to reduce response time for emergency situations, as well as improve the reporting of complaints to police.

滴滴美团称在南京已清退近20万辆违规网约车 – Xinhua

What happened: According to figures provided to the Nanjing authorities, Didi Chuxing and Meituan Dianping reportedly have removed 161,151 and 38,000 vehicles, respectively, from their fleets. The two ride-hailing platforms combined have removed nearly 200,000 vehicles that fail to meet standards.

The Nanjing authorities have increased supervision of 7 ride-hailing firms operating in the city earlier this month. Both companies have agreed to remove all non-compliant vehicles in Nanjing before October 18.

Why it’s important: China’s ride-hailing industry has been under great pressure to revamp its operations after the deaths of two Didi Hitch passengers. In an effort to ensure safety, the transport ministry announced early September that it would conduct checks on ride-hailing companies and work with the police to remove vehicles and drivers that fail to meet standards by the end of the year. Meituan Dianping started piloting its ride-hailing service in Nanjing earlier this year but announced last month that it would halt its expansion into ride-hailing due to the ongoing passenger safety crisis.

哈啰出行回应上线打车业务：正与合作伙伴试点 – Tencent

What happened: Hello TransTech (Hello Chuxing in Chinese), formerly known as Hello Bike, has started piloting taxi-hailing service in China working with partners in Shanghai, Nanjing, and Chengdu. The company did not reveal when and where it will officially launch the new taxi-hailing service.

Why it’s important: Chinese bike sharing company, HelloBike, rebranded itself as “Hello TransTech” in September in a bid to expand its operations to other mobility services. The Ant Financial-backed company is not the only one trying to take a piece of China’s lucrative ride-hailing market. Earlier this year, Chinese on-demand food delivery service operator Meituan Dianping started piloting ride-hailing service in Shanghai and Nanjing but announced last month that it would suspend its expansion into ride-hailing amid passenger safety crisis at Didi Chuxing.

滴滴出行举行乘客意见征求会 顺风车仍持续无限期下线 – Tencent Tech

What happened: On the afternoon on October 6, Didi invited driver and customer representatives to an internal discussion on ride-hailing safety, service, and driver management. The company decided to continue the suspension of their carpooling function. The discussion centered around safety issues on the drivers’ side – allowing only cars with video recording equipment to pick-up drunk passengers and setting up special report mechanisms were two possible solutions discussed. Didi’s CEO Cheng Wei, President Liu Qing, CTO Zhang Bo, and other high-level officers attended the discussion.

Why it’s important: Public safety pressure and carpooling service suspension will reduce Didi’s passenger absorption capability, and add an extra burden to any profitability plans. Meanwhile, the situation could force Didi to give up sizeable market share and allow competitors to fill the service vacuum, considering the large ride-hailing market. However, criticism concerning safety has raised the market-entry threshold.

Uber Is Back in China: But for Making Bikes, Not Ride-Hailing —Bloomberg

What happened: After selling its ride-hailing operations to Didi in 2016, Uber is coming back to China but not to compete for the market again. The company is ordering bikes and scooters for its bike-rental business back in the US. Uber has no plans to bring the scheme to China but it is considering other Asian countries.

Why it’s important: After a period in which ride-hailing companies were investing in bike-rental (Didi into ofo, Grab into Singapore’s failed platform oBike), integrating mobility services is all the rage. Didi kicked off the trend by taking over troubled bike-rental platform Bluegogo in January. Uber bought electric bike-rental platform Jump in April, around the same time that Didi bought its second service Mobike. Indian Ola started its own bike-rental service back in December 2017. Looking forward, we are likely to see more mobility services added to one single platform.

自己无法满足数亿民众出行需求 欢迎更多企业投入 – Tencent Tech

What happened: Ride hailing giant Didi published a public announcement last night, admitting that the company itself cannot satisfy the whole Chinese ride hailing market’s demands. The company also stressed that it would strictly follow related regulations, and continue strengthening safety management. Didi also said that it has increased the number of safety supervision staff by 300%.

Why it’s important: The announcement signals Didi’s tacit gesture to admit a dominant (even a monopoly) position in China’s ride hailing market. Welcoming new players show Didi’s open attitude to comply with the government and Chinese market’s demands of a healthier and more balanced market, despite that the company’s user base and market influence are still dominantly powerful in the country. The announcement may also be interpreted as a confident reply which suggests Didi’s irreplaceable leading role in the industry.

You may recall that, following the second murder of a Didi carpool passenger in four months, China’s transportation ministry promised industry-wide inspections.

The initial stage has concluded and results are now in, with inspectors finding nine major issues with the country’s ride-hailing and carpool service providers.

At a press conference held today, ministry spokesperson Wu Chungeng listed the following problems (available in Chinese here):

1. hidden dangers for public safety
2. hidden dangers in carpooling services
3. weak systems for managing emergencies, with low efficacy
4. illegal operations
5. failure to take responsibility for safety
6. lack of trust in business platforms
7. personal information-related safety problems
8. risk to social stability
9. suspected industry monopoly

Together, the nine issues paint a picture of China’s ride-hailing industry in fairly broad strokes. They were gathered over the course of a government-led inspection that began on September 5. And although the last point seems aimed directly at industry giant Didi, the survey of ride-hailing companies was a comprehensive one, covering competitors Shouqi, UCAR, Caocao, Yidao Yongche, Meituan, Dida, and more, CCTV reported.

The resulting report was compiled from a combination of on-site inspection, data collection, inquiries, and analysis of the companies. The inspection team also put together initial suggestions on how to address the ride-hailing industry’s issues.

The next steps, Wu told reporters, will be to submit the report and direct relevant departments to act in order to eliminate “hidden dangers” in China’s carpooling and ride-hailing businesses.

The government initiative, while somewhat vague, may be welcomed by Chinese consumers, many of whom were left deeply uneasy after the murders of two Didi Hitch passengers. Didi responded to public sentiment earlier this month by enacting a series of safety upgrades across its services, including more background checks, a daily safety knowledge test for drivers, and an upgraded panic button for passengers.

It seems that even more changes may be coming up in the near future, however, impacting the industry as a whole.

China’s ride-hailing giant is revving up to service Japan, starting with its second biggest city – Osaka. A press release states that Didi launches taxi-hailing service today in Osaka and the Senshu area, including Kansai International Airport.

Didi Japan, a joint venture with Japanese conglomerate SoftBank, seeks to cater to the country’s taxi market, the third biggest in the world with 1.6 billion annual passengers. Osaka alone has 8.8 million residents and will be the biggest international city Didi has tackled so far.

The launch comes just ahead of China’s fall Golden Week holiday, which begins on National Day (October 1) and ends October 7. According to the press release, Didi Japan’s taxi-hailing service will accommodate travelers from mainland China, Hong Kong, and Taiwan, who can hail taxis in Osaka, access Chinese-Japanese text translation, and get “bilingual customer support” via their apps.

Didi’s entry into the local taxi market will mean increases in efficiency as well as income for Japanese drivers, according to its statement. Japan is one of the ride-hailing giant’s “core overseas markets,” in addition to Australia and Mexico.

The launch seems especially timely in light of recent news: Ctrip.com reported that for the first time, Japan is the number one choice for Chinese travelers over the upcoming Golden Week holiday, despite a recent earthquake and typhoon. A total of 7 million travelers from the mainland are expected to go abroad this year.

After Osaka, Didi Japan plans to enter Kyoto, Fukuoka, Tokyo, and other cities in the “near future,” Didi’s press release states. It also quoted company president Jean Liu’s commitment in July, when Didi Japan first launched, to “[develop] extensive collaboration with all industry players to assist in smart city programs across Japan and Asia.”

The recent announcement is a bright spot amid news coverage of Didi over the last couple months. Almost two weeks ago, the company finished adding significant safety upgrades to its Chinese ride-hailing services following public outrage over the murders of two carpool passengers.

China’s Waymo challenger Pony.ai hits the accelerator to speed up to a robotaxi fleet of 200–South China Morning Post

What happened: At the World Artificial Intelligence Conference in Shanghai yesterday, autonomous driving startup Pony.ai announced that it plans to expand its fleet of self-driving taxis to 200. The company aims to have around 100 vehicles each in China and the US by early next year. Company co-founder and chief executive James Peng didn’t provide a specific date, but the expansion would be a significant step up from its current 20 taxis. According to Peng, Pony.ai’s current goal is to “build a fleet” and “achieve scalability.” Additional vehicles would help provide more data, and push the company further towards commercialization.

Why it’s important: Alphabet’s Waymo currently leads the autonomous taxi pack, and in March ordered 62,000 more minivans for its fleet. Although Pony.ai still lags far behind, Peng showed confidence in the company’s ability for “fast iteration” in a field with vast potential for development. But it may be a rough road ahead – Pony.ai has to contend not only with international competitors, but also startups like Jingchi as well as Baidu, Alibaba, and Tencent.

Starting September 8, Didi suspended seven late-night services for a week as it rushed to implement a host of new safety features, including audio recording on Express and Premier trips, a mandatory daily safety test for drivers, and an improved panic button to contact police. The upgrades followed widespread public outrage over two high-profile murders of Didi passengers in recent months.

Despite the improvements, China National Radio called out the ride-hailing company for potentially misleading users about its emergency button. Although the feature is branded as “一键报警,” usually interpreted as “one click to call the police,” it actually prompts passengers to tap at least twice to contact authorities.

According to the Didi app, clicking the button brings passengers to a page with information about their car, driver, and location. From there, users must tap again to text or call the police, with either action automatically sending their trip information to all emergency contacts via text. At the same time, users will receive an identical message on their own phones.

When asked whether the apparent misnomer could pose a safety risk for passengers in emergency situations, a Didi representative referred TechNode to materials stating that the vast majority of users “test” the function by tapping once but don’t follow up by initiating an emergency call or text. According to the statement, Didi also has more improvements planned for the button.

“We are exploring ways to tackle external constraints and have the trip information sent to police automatically through partnerships with law enforcement agencies.”

Another document shared with TechNode compared safety features of multiple ride-hailing services. It showed that Didi’s new daily facial recognition checks and plans to cooperate further with Chinese police now set it apart from its competitors.

Go-Jek aims to raise $2 billion for Southeast Asia expansion: sources —Reuters

What happened: Indonesian ride-hailing firm Go-Jek is seeking to raise about $2 billion from existing investors, including Tencent and JD.com. Go-Jek is preparing an offensive against its main rival Singapore-based Grab, which is considered to be close to Tencent’s main rival Alibaba.

Why it’s important: The two Chinese tech giants have already made steps into the Southeast Asian e-commerce market after Alibaba acquired a majority stake in Lazada and invested in Tokopedia. Tencent, for its part, invested in Singapore’s Sea which operates Shopee, while JD, which is backed by Tencent has been making investments in smaller e-commerce platforms in the region. The ride-hailing market seems to be next. Both Go-Jek and Grab are raising billions of dollars and investing hundreds of millions of dollars in the race to gain dominance in Southeast Asia.

滴滴消失的第一夜：出租车漫天要价，强行拼车拒载，黑车暴增–AI财经社

What happened: Starting from September 8th, China’s most popular ride-hailing app suspended seven late-night services for a week as it implements new passenger safety measures. Not surprisingly, the temporary suspension led to a surge in taxis and illicit “black cabs” trying to make up the difference. This past weekend in Beijing’s busy Sanlitun neighborhood, taxis were hard to come by and other ride-hailing apps faltered under the large volume of passengers. Social media users in other cities also complained of price-jacking, sometimes to three or four times the normal fare.

Why it’s important: Despite public backlash over the deaths of two passengers this year, Didi remains the country’s biggest ride-hailing company. Its popularity has also helped to supplant or counter phenomena like black cabs and unscrupulous taxi drivers, making life easier for city dwellers. Much as non-Chinese consumers were unsure if they could drop Facebook following the data breach scandal, PRC residents may now be wondering if they’re ready to live in a world without Didi, or another ride-hailing equivalent.

程维内部信确认滴滴巨亏：永远不会为利润放弃安全 —QQ Tech

What happened: Cheng Wei, founder and CEO of China’s biggest ride-hailing platform Didi, sent an email to employees, responding to the murder of a female passenger on August 24. The letter was released to the press on Friday. According to the letter, Cheng said the company would never trade passengers’ safety for profit. In the letter, Cheng Wei revealed that Didi has not profited for the past six years. In the first half of 2018, Didi’s net loss reached RMB 4 billion.

Why it’s important: The reveal of loss of revenue comes amid the accusations that Didi has prioritized profit over safety issues. According to the letter, the costs of promotional campaigns, drivers’ subsidization, and other operations alike were more than RMB 1.2 billion.

Meituan Dianping to halt ride-hailing expansion in China amid crisis at industry leader Didi – SCMP

What happened: China’s on-demand service platform Meituan-Dianping said it would halt further expansion into China’s ride-hailing market as Didi Chuxing has been deeply strained over the murder of a passenger in late August. Meituan said the decision was made after evaluating “the synergistic value” of car-hailing services and the current market dynamics.

Why it’s important: Meituan started pilot ride-hailing operations in Shanghai and Nanjing earlier this year and had expected to expand to at least five cities. Meituan is seeking initial public offering in Hong Kong, and the further regulation and possible risks of running the ride-hailing business made Meituan shy away. According to analysts, Meituan’s retreat from the market will not affect Didi much since Meituan only operates in two cities.

Didi upgrades panic button and adds audio recording after riders killed–CNN

What happened: Starting this Saturday, Didi will suspend seven late-night services for a week as it implements additional safety measures. Upgrades include an improved emergency button that allows users to instantly call the police, a new function that will record audio on Express and Premier trips, more background checks, and a mandatory daily “safety knowledge test” for drivers. The measures follow widespread public anger over two passenger murders in the last four months and arrive just in time as Chinese authorities begin their inspections of ride-sharing companies today.

Why it’s important: Didi has been on the scramble to make up for a significant drop in public trust following the two high-profile murders, as well as a string of sexual assaults that have taken place in recent years. Following a public apology from company founders last week, this appears to be the ride-hailing giant’s latest attempt to appease angry users.

Correction, Sept 1: This post originally stated that Didi suspended services beginning last Saturday.

China’s second largest e-commerce platform JD.com has entered the ride-hailing business.

Jiangsu Jingdong Information Technology, a subsidiary of JD.com, quietly updated its information on China’s National Enterprise Credit Information Public System in late August. The update added online taxi booking, used automobile sales and public transportation services.

JD.com didn’t respond to the inquiry made by local media Monday.

Jiangsu Jingdong Information Technology mainly focuses on JD.com’s delivery services. It obtained the delivery certificate from the State Post Bureau of China in 2010 and has 298 branches in provinces across China including Shandong, Shaanxi, Zhejiang and Sichuan. According to local media, experts were quoted that it’s possible that JD wanted to build a Didi for freight because of the company’s expertise in logistics. Statistics show the market value of freight is worth RMB 1.2 billion, ten times more than the online ride-hailing market.

JD can also take advantage of the network it has built on deliveryman to expand into the online personal ride service if it intends to.

China’s ride-hailing business is undergoing a new wave of shifts and regulations as the public was blaming Didi for the murder of a female passenger on August 25 while she was using Didi’s carpooling services. The public accused Didi of lacking safety measures. Governments agencies across the nation have also launched investigations against Didi.

Former founder of Kuaidi Dache, Chen Weixing, announced his coming-back Thursday with a new blockchain based ride-hailing app VV Go that seeks to improve passenger safety and increase the income of drivers.

Tencent-Backed Tesla Rival Forms NEV Ride-Hailing Firm– Yicai Global

What happened: Chinese electric vehicle manufacturer Nio has set up a new car-rental and ride-hailing subsidiary in the country’s southern island province of Hainan. The report points out that the new firm could be related to the company’s partnership with China Automobile Technology and Research Center and several other companies inked on August 21.

Why it’s important: Nio’s newly founded subsidiary is obviously part of China’s ride-hailing resurgence. Apart from Nio, the burgeoning sector witnessed the entrance of several big name players over the past year, including Meituan, state-owned SAIC Motor, mapping company AutoNavi, and more. New players in the field could pose a series threat to Didi Chuxing’s current dominance, especially at a time when the ride-sharing giant is under public backlash due to passenger murder scandals. NIO has filed to list on the New York Stock Exchange this August.

The death of a 20-year-old woman who was raped and murdered while using ride-hailing firm Didi’s carpooling service last week has triggered renewed outrage. The company suspended its Hitch service on Monday following the death of a second female passenger within the past four months, saying it would only resume operation after all safety issues were addressed.  

On August 24, the passenger surnamed Zhao was on her way to a birthday party in southern Zhejiang province. During the trip, her Didi driver navigated to a secluded mountainous area, coerced her into transferring around RMB 9,000 to him, and then forced himself on her before taking her life.

While safety issues are a sector-wide problem, the murders have drawn the ire of government officials and the public alike for creating an environment in which harassment and killing are possible.  Most notably, the company’s customer service staff have faced scrutiny for their poor handling of this case and others.  

After realizing something was amiss, Zhao contacted her friends, pleading for help. They, in turn, notified Didi’s customer service team, repeatedly asking for information about the driver. Their requests were met with assurances that the case had been flagged, but nothing more. After the police got involved, they too were made to wait. It took them over two hours to get information about the driver.

A day before Zhao’s death, another passenger, surnamed Lin, allegedly almost suffered a similar fate at the hand of the same driver. However, she grew suspicious and got out of the car, eventually threatening to call the police. Lin took a photo of the car and submitted a complaint to Didi’s customer service department. Staff promised to get back to her but never did.

The failures of the customer service team have garnered increasing amounts of attention. But it is also Didi’s lack of contingency plans if one party cancels a trip that is worrying.

Common cancelations

In both cases, the trip was canceled shortly before or after it started, a common practice that allows drivers to pick up more passengers en route. In Zhao’s case, police reported that she had, for unknown reasons, canceled the journey in the app one hour after the trip began. Didi initially claimed she was never in the car and refused to give any further information. Similarly, Lin canceled her journey at the driver’s request after he said he would be late. Lin agreed because she thought this was common practice among Hitch drivers.

The company launched safety functions like Emergency Help Button with real-time sound recording feature and Itinerary Sharing in July 2016, and the Emergency Help functions were updated in June 2018. However, these features are not available unless a trip is active.

Apart from technical and other shortcomings, the problems are also institutional. The platform has repeatedly been criticized for breeding a culture of sexual harassment. Hitch, which was previously likened to a social network, allowed drivers to view the age, gender, and occupation of the passenger. More worryingly, it also permitted reviews of the passengers which often made lewd references to female passengers’ looks and body types, which had been taken down after the murder of the flight attendant. The objectification also extended to its advertising campaigns, in which the company made use of innuendo to attract drivers at the expense of female passengers.   

Macro factors

But general macroeconomic factors also need to be considered. China’s slowdown is also affecting jobs and increasing the difficulty of finding employment with adequate income. This is especially true among the younger generation. Despite a record number of graduates leaving university, China’s economic growth fell to 6.7% in 2017, with unemployment in this bracket reaching as high as 30%.

When an air hostess who was also using the company’s Hitch service was murdered in May, Didi’s facial recognition system failed to alert the company that the driver was unauthorized to use the platform. Didi’s vetting practice for drivers is again being called into question. The company claims it collects vehicle and identity information from drivers, and information relating to criminal records every three months from the police. It says those with severe violations of “public safety, public security or traffic safety, or a history of mental illness,” will not be allowed to use the platform.

For Didi, the murders mark a severe breach of trust, exemplified by the increased downloads of apps that facilitate video calls to police. Following the latest apology by the company, in which it promised to devote more time and resources to customer services and develop better contingency plans, internet users questioned whether it was another perfunctory public relations stunt.  

Users also began documenting their departure from using the platform on social media, prompting the use of the hashtag #BoycottDidi. As a result, the company’s app fell from 9th to 61st place in the Chinese Apple App Store. It is unclear whether the incidents will cause the company to delay its $80 billion IPO, which is rumored to take place this year.

Government’s concern

But Didi is not just going to have to answer to its customers. China’s National Development and Reform Commission has announced plans to extend the country’s nascent social credit system to the transport industry following the latest murder. This is bound to have far-reaching effects on companies in the sector, which could face extensive cross-departmental punishments for infractions. Officials have called for greater general oversight of the ride-hailing sector, which has had a turbulent few years, with accusations of sexual harassment as well as price wars between major players.

The Ministry of Transport has also weighed in with a list of demands. “These two vicious incidents that have violated the life and safety of passengers has exposed the gaping operational loopholes of the Didi Chuxing platform,” it said in a statement and ordered the company to improve its driver vetting process, among other demands.

The murders are affecting the industry as a whole. Most notably, mapping company AutoNavi suspended its carpooling service shortly after news of the killing went public. Didi rival Dida also made changes to its service after the last Didi passenger was murdered in May by removing a social networking component from its app.

There is likely to be pushback from local governments around the country. Didi has already been summoned by authorities in ten cities around the country, which require them to address its security loopholes, integrate vehicle and driver data into a government-supervised system, and implement an “emergency SOS” button its app.

However, it is clear that local governments expect compliance by the industry as a whole, and they are seeking greater supervision of ride-hailing platforms. Didi is not the only company that has been summoned after the latest murder. Up to eight other firms are being caught in the net of government supervision.

With additional reporting from Chris Udemans

The speed at which Chinese tech companies are burning cash is disturbing. In order to maintain its dominating position, China’s massive service platform Meituan has spent over $4 billion in the past seven years. But O2O is not the only field that witnessed a fierce land-grabbing battle. Similar subsidy-fueled wars are going on in virtually every emerging market from ride-hailing to bike rental.

The prevailing model for a startup to prosper in the Middle Kingdom is to snap up market shares as fast as possible, often luring customer by providing massive subsidies and extensive marketing campaigns. Once they build their brand and clear up major competitors, they will have a final say in monetizing its users.

Before reaching a critical mass, in Didi’s case over 95% of China’s ride-hailing market, these companies are largely funded by venture capital and private equity firms, along with larger internet companies like Tencent and Alibaba. The rise of a raft of emerging tech verticals draw capital in and billion dollars investments are constantly hitting the headlines of local media.

Spoiled by abundant capital, the entire marketing strategies of some companies are formed around losing money. “2VC model” was jokingly coined in the craziest days of China’s fundraising extravaganza. Like customer-targeted business is shorted as 2C or ToC business, 2VC is  a term created for cash-burning startups that survive only by raise funding from venture capitalists instead of a sustainable profitability model.

However, two recent scandals surround China’s tech tycoons show that “VC welfare” is coming to an end in some of the more mature fields. Ultimately, users are going to pay for the tech unicorn’s sprawling growth.

Renting a home in China’s megacities like Beijing and Shanghai are becoming increasingly costly. The possible roles Chinese online real estate brokerage platforms have played in driving up the skyrocketing home prices sparked national outrage recently.

A Beijing landlord surnamed Cheng recounted his experience on a Chinese bulletin board about how Ziroom and Danke, another operator, had engaged in a bidding war for leasing out his apartment in the Beijing suburbs. While Chen had planned to rent out a 120-square-meter apartment for RMB 7,500 ($1,098) per month, the price was eventually raised to RMB 10,800 after the competitive bidding.

As one of the proptech unicorns in China, Ziroom takes out long-term leases of existing homes from individual landlords. The houses are then sublet to tenants, coupled with weekly cleaning, wifi, and other services. The company raised a whopping RMB 4 billion ($622 million) in January at an RMB 20 billion valuation. Its parent Lianjia, a residential brokerage, reportedly received RMB 2.6 billion in January 2017.

With abundant capital, Ziroom easily got a larger budget in striking deals with landowners in a bid to gain a larger market share. As the company gradually gain supremacy in the sector, however, they are under increasing pressure to show its profitability capacity. That means raising rents, but this will put the costs on the shoulders of their users.

Hu Jinghui, the former vice chief executive officer of another real estate agency Woaiwojia criticized competitors like Ziroom for acquiring apartments at above-market-value prices and then renting them out at even higher prices, Sixth Tone reported.

Ziroom denied its role in rising home prices in Beijing, claiming that the rental apartments only account for less than 5% of the rental market. It promised to put an additional 120,000 apartments on the market in an effort to stabilize prices.

In more extreme cases, the VC-backed fast growth and hasty monetization approach not only cost money but also lives. China’s ride-hailing giant Didi comes under fire recently after a second female user was being raped and murdered within four months. To worsen the case, a local report shows that there are at least 50 sexual harassment and assault incidents by Didi drivers over the past four years. The public backlash against Didi peaks when angry users called for the mass to delete Didi’s app.

“We raced non-stop, riding on the force of breathless expansion and capital through these few years, but this has no meaning in such a tragic loss of life. Throughout the company, we start to question if we are doing the right thing; or even whether we have the right values. There is an enormous amount of self-doubt, guilt, and soul-searching,” said Didi CEO and founder Cheng Wei and president Liu Qing in an apology released four days after the incident, admitting the company’s misstep in pursuing fast expansion and return while partially sacrificing user benefits.

Controversies about Didi’s measures to achieve profitability are nothing new. Earlier this year, the company was accused of charging higher prices to customers who it thinks will be willing to pay more, a kind of personalized pricing, or price discrimination, targeting at premium members.

But the company refutes price discrimination claim, saying that “Didi has never used its big data capabilities to disadvantage or bully regular passengers and will never allow price discrimination.”

While lots of China’s emerging markets are quickly maturing and vertical dominators are reaching the critical point to monetize. The experiences of Ziroom and Didi serve as cautionary tales for why we need to balance profitability and public goodwill.

滴滴出行 App Store 下载排名从第 9 滑落至第 61 名 – 动点科技

What happened: Didi Chuxing’s app downloads have taken a nosedive following the second passenger murder that sparked nationwide outrage. According to data from mobile insights and analytics firm App Annie, the ride-hailing app was ranked the 9th on Apple’s iOS app store in China on Aug 20th, but slipped to 61st in just 9 days.

Why it’s important: Didi Chuxing, China largest ride-hailing company, is now facing intense pressure from both the public and authorities to improve passenger safety. The company has since suspended its Hitch carpooling service as it examines its practices. In May, a young flight attendant was found murdered by her Hitch driver, which prompted Didi to suspend the carpool service for six weeks as it adds new features to improve the safety of passengers.

Another incident is shaking up China’s ride-hailing industry after multiple ride-sharing drivers were caught live-streaming themselves and even harassing their female passengers. Since the discovery, several live streaming platforms have announced tightening streaming rules.

News of drivers live-streaming passengers on popular Chinese streaming site Huya without their knowledge broke out on August 29. The news came only several days after China was shaken by a rape and murder of a young woman by a driver who picked her up through ride-hailing platform Didi Chuxing’s carpooling service. The murder, which was the second one on Didi’s platform in only three months brought China’s ride-sharing and ride-hailing industry under close attention by the authorities.

The drivers—suspected of belonging to the carpooling service of a smaller-scale Didi competitor Dida Chuxing—exhibited disturbing behavior such as allowing audiences to choose their next fare based on user profile photos and directly harassing women with vulgar language in order to boost their popularity

Audience members were reported to post crude comments during the live streaming sessions. According to a Beijing Youth Daily report, once a female passenger boarded the car, the audience could soar up to 34,000. One drive reportedly made RMB 700 in a single day by streaming female passengers.

Live streaming platforms including Kuaishou, Huya, YY, and widely popular ByteDance’s short video site Douyin promised to tighten rules and supervision in order to ensure privacy according to The Paper.

Huya, who hosted the reported broadcast, said that the live-streaming was against regulations and that it will carry out special rectification against the violations. The live streaming site banned broadcasting from any type of ride-hailing or ride-sharing vehicle and suspended the two accounts that were reported to be live-streaming passengers on August 29.

The live streaming incident is just another part of China’s ride-hailing crisis, the brunt of which is carried by Didi—the country’s largest platform. According to reports, over the past four years, media and relevant authorities reported at least 50 sexual harassment and assault incidents by Didi drivers. Didi was summoned by authorities in 10 Chinese cities while the Ministry of Transport said the incidents exposed gaping operational loopholes of the Didi Chuxing platform.

The company has issued an apology after the murder that took place August 24 and once again suspended its carpooling service, a move which was soon followed by Alibaba-backed AutoNavi which also operates a carpooling service.

顺风车司机直播女乘客牟利–Beijing Youth Daily

What happened: Multiple drivers were caught live-streaming passengers, apparently without their knowledge, on live streaming platform Huya. The drivers are suspected of belonging to the carpooling service of Dida Chuxing, a smaller-scale Didi competitor. Drivers exhibited disturbing behavior such as verbally harassing female passengers, or allowing audiences to choose their next fare based on user profile photos. Audience members were reported to post crude comments during the live streaming session. One driver claimed he had made RMB 700 in a single day by streaming female passengers. A Huya representative said the platform is currently investigating the accounts under suspicion.

Why it’s important: In the wake of an alleged murder of a Didi Chuxing passenger, safety and privacy violations are surfacing with a vengeance and multiple companies are under scrutiny. Going forward, the demand for corporate accountability will likely continue to grow.

Three days after the second murder in 3 months on their platform, Didi has been summoned by local authorities in Chongqing, Guangzhou, Shenzhen, Dongguan, Wuhan, Guiyang, and Haikou, following meetings demanded by Beijing, Tianjin, and Nanjing on August 27th.

“These two vicious incidents that have violated the life and safety of passengers has exposed the gaping operational loopholes of the Didi Chuxing platform,” the Ministry of Transport said in a statement, ordering the ride-hailing company to improve its driver vetting and education process among other demands.

Local authorities across the country also released a list of requirements following the central government’s criticism towards Didi.

The Shenzhen government warned that if Didi refuses or fails to address its security loopholes by the end of September, the company will face possible punishment including revocation of business license and removal of the app from app stores.

The Chongqing government also listed 11 demands including integrating data of all vehicles and drivers into a government-supervised platform.

Wuhan’s public security bureau and the transport committee summoned Didi and 8 other ride-hailing platforms, urging online rental services to instate a stricter the training and education process for drivers and demanding Didi’s active cooperation with the security departments.

Guiyang transport authority also called in Didi, Shouqi, Shenzhou, Shenma and other online rental platforms for questioning. Authorities ordered Didi to stop accepting unauthorized vehicles and drivers onto its platform, and ride-hailing apps to implement an “emergency SOS button” feature in apps.

On August 24, a gruesome murder of a 20-year-old woman by her driver on Didi Chuxing’s popular carpool service Hitch stunned the Chinese public. This is the second murder in three months after a flight attendant was killed in May by a driver using the same Hitch service.

Since the incident, Didi has come under fire from the media, the public, and government authorities. Local authorities across ten cities in China have called out on Didi demanding the ride-hailing giant to take immediate actions.

After the incident, Didi apologized for making “disappointing mistakes”  and fired two of its top executives. The Hitch carpool service is currently suspended.

Updated 10:45 am 29 August 2018: Didi CEO Cheng Wei and president Liu Qing have issued an official apology to the public on August 28. The post is updated to include the information.

Didi’s latest scandal involving the death of a 21-year old girl murdered by her Didi Hitch driver put the China ride-sharing giant under severe public scrutiny. An investigation by local media shows deeper problems.

Over the past four years, at least 50 sexual harassment and assault incidents by Didi drivers were reported by local media and relevant authorities, according to a report by local media Southern Weekly. Of the 50 drivers, at least 3 of them have previous criminal records, but they managed to pass Didi’s driver identity check procedure. All of the 53 victims are female and seven of them were drunk at the time of the incident, the report added. Beijing, Jiangsu, Guangdong, and Zhejiang are the areas that recorded the most cases.

TechNode has reached out to Didi for comment and will update accordingly.

Although Didi’s safety problem first drew widespread public outrage when a 21-year-old flight attendant was raped and murdered in May this year, a former fatality that involves the death of a 30-year-old passenger could be dated back one year earlier to May 2017.

Regardless of its efforts, Didi’s security risks still run deep. Company CEO and Funder Chen Wei said in Didi’s annual meeting held on February this year that safety is Didi’s top priority and the rates of security incidents have dropped 21%. Cheng’s exclamation is controverted shortly as Didi investor Zhang Huan calls for stricter regulation after a Didi driver assaulted him.

In addition to public ire, local authorities have joined to push the Chinese ride sharing giant to react in a more responsible way. China’s Ministry of Transportation published a commentary article, lambasting Didi for its failure to offer effective preventive measures as well as urgent help during the incident, and only try to solve the problem with pricy settlements. The article further pointed out it’s important to discuss whether Didi’s executives should take legal responsibility in cases like this. Xinhua News also suggested Didi should face legal repercussions if it doesn’t improve its safety record.

Following last week’s murder, Didi fired two executives: the general manager for Hitch and the company’s vice president of customer services. But neither CEO Cheng Wei nor president Liu Qing has extended a personal apology to the public after the repeated tragedies.

[Update] “We see clearly this is because our vanity overtook our original beliefs. We raced non stop riding on the force of breathless expansion and capital through these few years, but this has no meaning in such a tragic loss of life. Throughout the company, we start to question if we are doing the right thing; or even whether we have the right values. There is an enormous amount of self-doubt, guilt and soul-searching.” said Cheng and Liu in an apology released on August 28.

The incidents may put a dent in the valuation of the company, which is rumored to head for an IPO in the second half of 2018. The tech giant recieved $4 billion funding at $50 billion valuation in December last year.

Didi stops hitching service in China after second murder – and admits it was warned about accused driver – SCMP

What happened: Following the second murder of a female passenger in three months, Didi said it would suspend its carpooling service today. The company also said it had failed to investigate a complaint by another passenger that related to the driver that was allegedly responsible for the rape and murder in Wenzhou, Zhejiang province on Friday (August 24).

Why it’s important: The incident has caused public outrage. Posts on social media relating to the case have been reposted or read nearly one billion times. Didi’s inability to respond to customer complaints has also been called to attention. Prior to the murder, another female passenger reported the driver for harassing her. She claimed the driver attempted to drive her to a secluded area before she was able to get out of the car. Didi has responded to the second murder by firing Huang Jieli, general manager of its carpooling business, and Huang Jinhong, deputy president of the company’s services department. Despite the company revamping its service and including mandatory facial recognition for all drivers, many users have chosen to delete the app and cease using the company’s services.

Mapping company AutoNavi (高德地图) has suspended its carpooling service across China following the rape and murder of a female passenger by Didi Hitch driver.

Didi’s case set its local counterparts on alert for the security risks of their carpooling services. As part of China’s ride-hailing resurgence, AutoNavi launched a carpooling option in March this year, presenting it as a public service aimed at reducing traffic. Four months later, the Alibaba-backed company rolled out a mobility aggregation platform to further tap into the sector. The hitchhiking service on Dida (嘀嗒), another popular Didi rival, operates normally now, but the company removed its social networking feature after Didi’s passenger murder case happened in May.

A 21-year-old female passenger was murdered by her driver when using Didi’s carpooling service on August 24^th in the eastern city of Wenzhou. The incident sparked on an online backlash against the company over its safety problems. In response to the incident, the ride-hailing giant suspended its carpooling service and promised to address “many deficiencies” with its customer service.

But the raging public seems to have lost patience with the company as the current drama comes barely three months after a similar one in May. Didi suspended its carpooling services upon the May incident, but they soon resumed it after security enhancement. Limiting late-night rides, same-sex drivers and audio-recording every single ride are some of the solutions the tech giant proposed.

However, the effectiveness of these measures is questioned since sexual offenses by Didi drivers never ceased to catch public attention. It’s not clear how long Didi’s current suspension will last, but nothing short of sweeping improvements could win back the increasingly dubious customers. Other ride-hailing services are suffering from similar safety problems with carpooling services. They chose to suspend the service before coming up with effective solutions.

滴滴开始在墨西哥城招募司机 10月份正式运营 – Caijing

What happened: Didi has started recruiting drivers in Mexico City for its upcoming launch in October. Earlier this year, the ride-hailing giant began offering its services in Monterrey and Toluca and was reportedly preparing to launch in Guadalajara, the second largest city in Mexico.

Why it’s important: The Chinese ride-railing giant’s move into Mexico City means that it is going head-to-head with Uber, the largest ride-hailing service provider in the region. It appears that Didi has been picking up its pace in the expansion into Latin American markets. Its expansion strategy outside of China has been focusing largely on investing and working with local partners. However, in Mexico, Didi will operate under its own brand. With a population of over 21 million, Mexico City is similar to Shanghai and Beijing in terms of scale and market demand.

Didi, recently in the swamp of passenger safety concerns, is testing in-car video recording.

Reported by local media iyiou.com (in Chinese), passengers may find an in-app notification asking whether to activate in-car recording for safety protection. According to Didi’s response to iyiou.com, the function is not yet widely used, and not all Didi vehicles are equipped with a device.

Didi told TechNode that the recording trial started from the beginning of this year. Some vehicles in 5 pilot cities including Shenzhen and Nanjing are adopting the recording solution as the government’s compulsory demand. Further future plans are still under the company’s internal discussion. The use of recording devices is also likely to provide evidence for regular service disputes.

“Due to privacy concerns, the recording function will only be activated once a passenger confirms from their app. They can end it anytime during her ride,” Didi explained to us.

Prior to the video recording test, Didi made several safety upgrades to alleviate users’ safety anxiety. The company shut down its hitch service from May 12 to May 19, after a 21-year-old female passenger were killed by a driver late in the night in Zhengzhou. Didi’s available safety protection mechanisms include virtual contact number, in-car SOS dial, and several identity verification rules applied to drivers didn’t prevent the tragedy from happening.

Also in May, there were already experts suggesting initiating video recording or CCTV for passengers’ safety protection. Li Junhui, a researcher at China University of Political Science and Law, said (in Chinese) installing in-car cameras would be more practical than solutions such as audio recording.

According to Didi’s latest operation data, its platform processes over 30 million rides daily in China alone.

China-based global ride-hailing giant Didi Chuxing has launched Didi Mobility Japan, a joint venture with Japanese conglomerate SoftBank.

As ride-hailing is prohibited in Japan, Didi is focussing mainly on taxi operations. Its entrance into the local market will center on tech infrastructure support, which eyes technical and big data, and related driver and user experience optimization. A new ride-matching app for riders, drivers, and taxi operators will be available in major cities including Osaka, Kyoto, Fukuoka, and Tokyo. Didi says services will be launched within the next few months.

The joint-venture, though launched between two private enterprises, implies an expectation of national economic gains. In 2017, Japan hosted roughly 29 million foreign visitors, around 50% of whom were from Greater China (in Chinese).

Further, according to Didi, current users in Mainland China, Hong Kong, and Taiwan will soon be able to use real-time in-app Chinese to Japanese instant message translation when hailing taxis in the country.

Didi, which absorbed Uber China in 2016, tends to cooperate with existing local ride-hailing and other transport service providers when entering a new region. In 2015, Didi invested in Southeast Asian ride-hailing platform Grab, US platform Lyft, and Indian platform Ola. Cooperation with local players reduces operational costs, including asset investment and recruitment expenses.

In April, Didi launched in Mexico with its own ride-hailing service. This was Didi’s first direct operation overseas. To grab market share and attract drivers, the company said it would not charge commission fees from drivers until June 17.

This time in Japan, Didi is neither cooperating with local ride-hailing enterprises nor operating alone. The company told TechNode that its strategy of partnership building continues. Didi is offering a commission-free plan which currently specifies no expiry date.

“In the early stage of our business, we plan to focus on market cultivation and user base building. We aim to create an inclusive platform to integrate taxi enterprises around Japan. Therefore, at the moment we are having no plan to charge Japanese partner taxi companies any service fee or commission fee,” a Didi spokesperson said when asked about its cooperation model in the country.

Additionally, what’s usually ignored is SoftBank’s role. The active investment giant is doing more than just bringing tech to its home country. As Ken Miyauchi, President & CEO of SoftBank, said, “Combining Didi’s outstanding innovation with SoftBank’s extensive business base including advanced network infrastructure, I believe the joint venture can provide new value to both the consumers and taxi companies in Japan.”

Considering Japan’s power in innovation, it would not be persuasive to say the leading tech power in Asia lacks the research and production capabilities to produce and operate any Didi-like platforms. Having invested $5 billion in Didi, SoftBank will have to form close ties with Didi.

Besides, SoftBank has also invested $750 million in Grab, $250 million in Ola, and $100 million in Brazilian ride-hailing platform 99. The giant investor cares more about its global ride-hailing landscape, not simply Japan and Didi.

Only one month after ride-hailing platform Didi resumed its Hitch service during night time after a murder of a female passenger by its driver led to its suspension, another assault has rocked the company’s reputation.

Police in Huai’an city in Jiangsu province have arrested a driver named Liu for the suspected rape of a female passenger, local media is reporting. The driver confessed on July 13th and is waiting for legal processing. The woman surnamed Ma called a driver after a night out with a friend surnamed Chen who exited the car when she arrived at her destination. The driver assaulted the woman while she was drunk and sleeping.

Didi has responded TechNode with a statement saying that the company is in touch with all the parties involved and has provided the police with information on the suspect’s rides and history which was used in the case. Didi also said that the detection rate of criminal offenses on the platform is one hundred percent.

After verification, Liu’s registration certificate information was revealed as true and accurate. There was no record of complaints and no violent criminal record. We strongly condemn this crime. Liu’s behavior has seriously violated the relevant rules of the platform, and the platform has permanently banned him. At present, Chen is detained by local public security organs.

Didi’s last scandal involved a 21-year old flight attendant who was apparently murdered by her Didi Hitch (顺风车) driver who then proceeded to kill himself. The incident revealed flaws in the car-pooling service which was previously viewed as a social media platform. It allowed drivers to comment on the passengers’ personality and physical attractiveness, many of which were disrespectful towards female passengers. Another issue was that drivers could avoid verifying their identity.

Didi publicly apologized for the incident and reinstated new measures to ensure driver safety. After shutting down the service entirely on May 12, the company decided to suspend the night-time road sharing service on May 16. It also announced that it will introduce background checks of ID, driver’s license, and vehicle registration as well as face recognition for each driver every day.

Among other measures, Didi decided to make its emergency help button more prominent and offer the choice to dial the police, an ambulance of traffic emergency hotline as well as Didi’s emergency hotline. Pressing the button already starts a recording of what’s happening in the vehicle and prompts the Didi call center to call the passenger and share an emergency contact.

After this newest assault, Didi appealed to drivers and passengers to “jointly safeguard the security environment of the platform, do not indulge in impulsive behavior and do harm to others.”

As the ride-hailing market in China heats up again, Alibaba-owned AutoNavi (高德地图) also known as Amap has announced that its ride-hailing service Gaode Jiaoche (高德叫车) has gone online, TechNode’s Chinese sister site reports.

The move is just another small step for AutoNavi towards building its one-stop mobility aggregation platform. The ride-hailing service is integrated into AutoNavi’s platform Gaode Yixing (高德易行平台) along with other mobility options. The platform was launched in July 2017 and includes ride-hailing services from Didi, Shenzhou (神州专车), Shouqi (首汽约车), and Caocao (曹操专车). The platform also connects with China’s biggest bike rental companies ofo and Mobike as well as Alibaba’s travel and booking platform Fliggy (飞猪旅行), and other mobility services.

In March this year, the company launched a carpooling option presenting it as a public service aimed at reducing traffic. The company said it will not collect commissions from its drivers, allowing them to earn the full amount a passenger pays for the trip and promised not to subsidize the service.

The reason behind this move is data. Alibaba and AutoNavi have recently launched its City Brain platform which leverages AutoNavi’s abundant transport data and Alibaba Cloud’s cloud computing technologies to improve public transport systems.

Founder of Alibaba Cloud says smart cities can’t solve problems caused by China’s rapid urbanization

Many believe that the additional data could provide Alibaba with the edge to succeed in the race to develop the autonomous vehicles. The tech giant has been testing driverless cars since last year along with its rivals Baidu and Tencent. In addition, the ride-hailing service is likely to become another way for Alibaba’s payment service Alipay to expand.

Alibaba bought digital map and navigation solutions provider AutoNavi back in 2014 in a deal worth $1.5 billion. The purchase was meant to improve Alibaba’s data collecting abilities. In 2015, AutoNavi announced the launch of LBS+, a platform that provides location-based service solutions to businesses in car rental, O2O, and smart devices. Its partnership with Didi (in which Alibaba also holds a small stake) started long ago in 2013.

Alibaba is not the only one looking at improving its strengths in mobility and challenging Didi’s position. Meituan Dianping launched its ride-hailing service in February this year and bought bike rental company Mobike in April. According to Meituan’s CEO Wang Xing, expansion into mobility as just another way to serve its users. In April, travel platform Ctrip also announced it will be launching a ride-hailing service.

Another state-owned automotive company has joined the already crowded ride-hailing market, after Shanghai-based Saic Motor set up a new department and started exploring ride-hailing business

FAW Group Corporation is partnering with Didi Chuxing, China’s largest ride-hailing platform, to hire drivers in Changchun, where FAW Group is based. According to a hiring manager with FAW, the company only provides one car model for now. The Corolla Hybrid is a new energy vehicle produced by FAW Toyota Motor Sales, a joint venture between FAW and Toyota.

Drivers first need to register with Didi, rent the Corolla Hybrid cars and then start providing the service. The rental business uses the rent-to-own model. Drivers need to make a down payment of RMB 20,000, a RMB 4,300 monthly payment for 3 years and a remaining balance of RMB 15,000. The rates of compensation and withdrawal commission will subject to Didi’s policy which hasn’t been settled yet.

Because of stricter controls on ride-hailing business in China’s first-tier cities, FAW will focus on the markets of second to third tier cities, the manager said.

FAW neither participates in the operation of the ride-hailing business, nor is responsible for how many orders the drivers take. This makes the deal more like boosting sales of the car model.

FAW, founded in 1953, was China’s first automotive manufacturing company. For Didi, the agreement guarantees a stable supply of cars and since many of the manufacturing companies are producing more policy-favored new energy cars, car plates will be easier to obtain. For FAW, not only the value of ride-hailing market is expected to grow to RMB 23.8 billion in 2020 from RMB 700 million in 2018, but also cooperating with tech companies can help these legacy auto manufactures expand their online business.

Before this, Didi signed a strategic agreement with 31 automotive manufacturing business, including FAW, in April on corporate cooperation and developing new energy cars. The deal tries to unite FAW’s manufacturing capacity and Didi’s data and technology in smart transportation.

China’s ride-hailing market might be in for another stir. Former chairman of Baidu’s food delivery platform Baidu Waimai, Gong Zhenbing, is moving on to become the CEO of ride-hailing platform Yidao Yongche, The Paper is reporting (in Chinese).

Yidao went through a rough period in April and May last year after a cash squeeze that led to protests from its drivers over payments. Three of Yidao’s co-founders left the troubled company at the time. The company’s founder and former CEO Zhou Hang blamed its controlling shareholder LeEco diverting to other purposes an RMB 1.3 billion fund originally earmarked for the firm.

The arrival of Gong Zhenbing is a part of a wider restructuring of Yidao both in terms of leadership and ownership. This is the first time a CEO has been selected since last September when former CEO Peng Gang left. In June of last year, Taoyun Capital reached an agreement with LeEco on acquiring a majority stake in Yidao Yongche. Taoyun Capital has also backed bike-rental platform Mobike and JD.com financial services arm.

The restructuring could make Yidao a viable competitor to Didi which now rules the ride-hailing market and Meituan Dianping which is currently trying to snatch a piece of it.

Before joining Yidao, Gong served as the company’s advisor. According to him, Yidao will focus on the ride-hailing service itself. The company is able to offer cheaper prices for luxury vehicles. Yidao also has a different cost structure from Didi and other services because it doesn’t invest in maps, unmanned vehicles, and other services. This will enable them to give more funds to the drivers, he said.

“I’m very optimistic about the prospect of Yidao’s new model, that’s the main reason why I chose to join Yidao,” said Gong.

Gong was part of Baidu’s team since 2014. Baidu’s takeaway service was sold to its rival Ele.me in August 2017. Gong left the company in March this year.

DiDi has announced a range of measures to improve passenger safety, days after the ride hail platform suspended its intercity car-pooling service Hitch (顺风车) after the alleged murder of a passenger by her driver. As well as new features such as daily and per-trip facial recognition approval of drivers, Didi is consulting the public on the possibility of recording every single journey.

The company took the Hitch product down for a week of “rectification” on May 12 following the gruesome murder of a young female passenger in Zhengzhou on May 6, apparently by her Hitch driver. The suspected killer has reportedly since been found dead. China’s Ministry of Transport announced on May 11 plans to tighten regulation of the ride-hailing industry.

In a statement shared with TechNode, Didi has outlined several updates. The company said the changes will come into effect “in the coming days” and be implemented before Hitch resumes.

• Hitch will continue to be suspended between 10 pm and 6 am as the company evaluates night-time safety guarantees. Passengers and drivers on trips starting before 10 pm and expected to end after the cut-off will receive extra safety tips.
• Drivers will now have to photograph themselves before every Hitch trip for facial recognition approval.
• The controversial public use of profile pictures of passengers and drivers will end and be replaced with default images. Chinese netizens, especially female ones, have complained of inappropriate comments from drivers after uploading their profile pictures.

In addition to the Hitch changes, Didi is planning new ways to improve all its services in addition to existing background checks of ID, driver’s license and vehicle registration.

Anecdotally, one of the most persistent problems when using Didi is that the car that turns up does not match the license plate provided in the app for that booking. This is confusing when trying to identify the car booked, but also shows the flaws in the system.

• Drivers will now have to pass a facial recognition test every day as part of a Zero Tolerance approach to matching drivers and vehicles.
• A reward program will be created for passengers reporting mismatched cars and drivers.
• The emergency help button will be more prominent and will now offer the choice to dial the police, an ambulance of traffic emergency hotline as well as Didi’s emergency hotline. Pressing the button already starts a recording of what’s happening in the vehicle and prompts the Didi call centre to call the passenger and share an emergency contact.
• Additional funding will be made available beyond legal requirements to help victims and families.

The company is now opening a public consultation on whether to audio record every single ride. Users would have to consent in the app before this happening and the recording would be encrypted and stored on Didi servers, not phones, then deleted after 72 hours.

Didi is also asking the public whether people with spent criminal convictions unrelated to personal safety or public security should be given the chance to become Didi drivers.

Update: Did suspended its Hitch service after midnight, meaning May 12, not May 11 as reported.

Nanjing is reported to become the first city in China to put temporary controls on the number of vehicles that can be hailed online, according to Jiemian (in Chinese), to regulate the sector, protect rights, curb illegal practices and reduce risks in the taxi industry. By stopping the issuance of new licenses, Nanjing will put the brakes on the turf war fought there between Didi and Meituan, and will have a mixed effect on traditional cab drivers.

Nanjing’s local government has issued a document titled “Opinions on Strengthening the Regulation of the Taxi Market”. It states that from April 20, 2018, there will be a temporary block on any new taxi capacity. The PSB’s traffic department will suspend the registration of taxis for online booking and the local branch of the Ministry of Transport will temporarily stop processing taxi licenses.

Traditional taxis will also be impacted as traditional cab drivers will not be able to apply for additional licenses for picking up fares from online hailing platforms, but may benefit from the blocking of new drivers registering as Didi and Meituan drivers.

The report states that Nanjing has 8,000 taxis in active operation and 3,000 inactive. However, there are 12,000 vehicles which are licensed for online ride-hailing (both the vehicle and driver), and a further 6,000 vehicles licensed for ride-hailing but still waiting for license plates. Car leasing companies have until April 20 to get as many cars approved as possible.

Ride-hailing is having a deep impact on China’s taxi drivers. Nanjing’s move follows a recent report about taxis in the city by The Paper (in Chinese). A reporter found fleets of abandoned taxis around Nanjing, including new vehicles still well within their 7-year lifespan. The Nanjing Taxi Association told The Paper that due to intense competition for passengers and drivers by ride-hailing platforms, the number of inactive taxis rose from 1,000 to 3,000 in the past year. Taxi drivers were getting around 40 fares per day before January 2017 which fell to around 20 a day by 2018 despite still working 12-13 hour shifts. The subsequent pressure on wages saw drivers’ previously monthly take-home pay falling from RMB 5-6,000 to RMB 3-4,000 per month, dropping below the minimum wage.

Chinese mapping company AutoNavi (高德地图) has launched a ride-hailing service in Chengdu and Wuhan and is hiring drivers in Beijing, Guangzhou, Shenzhen, and Hangzhou, with plans to launch in these cities, local media is reporting.

The company, owned by Alibaba, will not collect commissions from its drivers, allowing them to earn the full amount a passenger pays for the trip. Other operators, including Meituan and Didi, charge their drivers up to 10% the total cost of the trip. However, AutoNavi doesn’t provide its drivers with subsidies like other ride-hailing companies.

Alibaba could make use of the data it collects to enhance its location-based services capabilities. In 2015, AutoNavi announced the launch of LBS+, a platform that provides location-based service solutions to businesses in car rental, O2O, and smart devices.

It previously highlighted that it planned to monetize its platform through third-parties that use its data and trading user data.

The company is entering an already competitive space, with Didi and Meituan battling for their piece of the market. Most recently, Meituan launched its ride-hailing service in Shanghai, hoping to further challenge Didi.

Meituan, China’s group-buying website and e-commerce giant, rolled out ride-hailing service in Shanghai on Wednesday but was soon summoned by Shanghai city authorities (in Chinese) on the same day and warned to adhere to local regulations.

To further take on Didi, the dominant ride-hailing player, Meituan has employed low pricing policies and advertisements as it prepares to enter the sector by triggering a pricing war. It has placed advertisements with wordings like “hail a ride for only one yuan.”

Shanghai city authorities, however, are not so tolerant regarding the matter. The city’s public transport, police, and pricing supervision authorities warned Meituan on Wednesday that the firm failed to link the data of vehicles and staff to the city’s supervision platform of online ride-hailing businesses, as reported by local media. Also, local regulations require all registered vehicles and staff to obtain relevant licenses issued by Shanghai city authorities.

On top of that, the authorities also warned Meituan to employ a proper pricing strategy and must specify the pricing. The firm must not operate with lower-than-cost pricing, and advertisements must not include wordings like “hail a ride for one yuan” or “hail a ride at a low price.” Meituan was also prohibited from adding “thank you fees,” tips that add onto the regular charges.

TechNode reached out to Meituan but they declined to comment. Currently, Meituan’s ride-hailing service is still in operation.

Shanghai is the second city for the company to launch its ride-hailing service after rolling out in Nanjing last December. Other cities that Meituan are potentially launching include Beijing, Hangzhou, and Chengdu.

It’s worth noting that Didi, Meituan’s major rival in the ride-hailing sector, has been planning a foray into Meituan’s home turf—food delivery services—as early as last December. It has reportedly been engaged in the R&D of food delivery service.

Chinese O2O and e-commerce giant Meituan is going to launch its long-rumored ride-hailing service tomorrow (21 March 2018) in Shanghai, Chinese media iFeng is reporting. The report says they have confirmed the news with Meituan’s customer service staff.

As a latecomer in a highly consolidated sector, Meituan is diving in with huge subsidy plans. In a previous marketing campaign, Meituan said they would launch ride-hailing service once a city gets 200k votes on its online poll. Under the rule, the first 200k passengers to register can get ride coupons.

The customer service staff confirmed with iFeng that first 20k Meituan drivers in Shanghai can enjoy commission free service. For the rest of drivers who have made their votes, Meituan would collect an 8% commission fee and an information fee of RMB 0.5 for each ride.

Drivers who worked over 10 hours from 6:00 to 24:00 and processed 10 orders or more could get a basic income of RMB 600. If the daily turnover exceeds RMB 600, drivers will get an extra bonus of RMB 200.

Shanghai will be the second city for the company to launch this service after rolling out in Nanjing last year. Other cities that Meituan are launching Beijing, Hangzhou, and Chengdu.

While Meituan is spearheading forays into a sector that’s dominated by Didi, the ride-hailing giant is also working toward the launch of a food delivery service—one of Meituan’s core businesses, with aggressive food delivery rider recruitment plans. It’s a no-brainer that this would be a cash-burning battle between two of China’s most heavily-loaded tech titans. Meituan raised a $4 billion C round last October and Didi just announced its plans to raise $1.5 billion in funding using asset-backed securities (ABS).

Meituan’s ambition to reignite the ride-hailing war is getting serious. The Chinese O2O and e-commerce giant is rumored to launch on-demand car service in seven cities on 16 March, Chinese media TechWeb is reporting (in Chinese). Major cities of Beijing, Shanghai, Chengdu, Hangzhou, Wenzhou, Fuzhou and Xiamen are included in the list.

After launching ride-hailing service in Nanjing last year, the company announced plans to enter more cities like Beijing and Shanghai. Shortly after its announcement, however, the company was beset with setbacks for its legal status in running ride-hailing services in these cities, where separate permits from different local municipalities are needed.

Meituan Dache announced that it would roll out in Beijing on January 12, but order from Beijing authorities has forced the firm to postpone its launch. The company announced in January that it has obtained local permission in Nanjing and Shanghai.

A company spokesperson denied the rumor without giving any details.

Even though there are still uncertainties, Meituan has been successful in piling up anticipations for the new feature. Last December, the firm has rolled out a registration page where users can vote for their cities. At the time, Meituan said they would launch the service once a city gets 200k votes.

On top of that, Meituan also leveraged subsidies, the most effective way to secure users in a field where Didi Chuxing dominates. Under its rule, the first 200k passenger registers can get ride coupons and first the 50k (Beijing) or 20k (Shanghai) drivers can enjoy commission free service.

Chinese upstart tech firms may boom from a certain vertical, but there’s a general trend for them expand into an all-inclusive platform. This trend inevitably results in business overlap between major companies, especially in red-hot verticals like ride-hailing. Similarly, Didi is reportedly working toward the launch of a food delivery service—one of Meituan’s core businesses.

Caocao Zhuanche(曹操专车) an electric vehicle sharing company backed by Chinese automaker Geely, has completed a RMB 1 billion ($156 million) series A round from various investors, at a valuation of over RMB 10 billion ($1.6 billion), Sina Technology is reporting. Investors in the round were not disclosed. With the new funding, the company plans to expand in cities such as Shenzhen and Chongqing.

While Didi Chuxing still dominates China’s ride-sharing market after the acquisition of Uber’s China operations, there is still room for other players to grow. In last December, Didi Chuxing’s market penetration rate was 11.4%, followed by Yidao Yongche (0.9%) and Shenzhou Zhuanche (0.7%), according to Jiguang Data. Caocao Zhuanche, taking the 7th place in the list, showed an explosive growth rate 512.7% in December.

Three things seemed to have contributed to Caocao’s high valuation. Firstly, Caocao Zhuanche uses only electric vehicles from Chinese automotive manufacturing company Geely, who is also a strategic investor to the company. Unlike other ride-sharing companies, Caocao Zhuanche owns all the vehicles used in its service and trains their drivers and gives certificates to them. On top of taxi hailing services, the company also offers car rental services and private car hailing services which user can also have a tour guide option.

Launched in 2015, Hangzhou-based company claims that it now operates in 17 cities with over 12,000 drivers, and fills roughly 150,000 daily orders. It is named after Caocao(曹操), one of the central figures of the Three Kingdoms period.

Expanding to car-hailing business seems like a new movement for Chinese companies. Chinese O2O ecommerce company Meituan-Dianping set up its ride-sharing unit, and chauffeured car service provider Yidao Yongche also launched its taxi-hailing service. The two companies are currently having a subsidy war to attract more users to their services to win over Didi’s market dominance. Earlier this month, bike rental startup Mobike also expanded to car hailing service by partnering with Shouqi Limousine & Chauffer (首汽约车) to battle its arch rival having their bike rental service on Didi Chuxing.

Meituan, China’s leading O2O and e-commerce platform, is triggering a subsidy war as it is making a foray into the ride-hailing sector, offering users an average RMB 20 ($3) subsidy per order, local media reports.

Offering subsidies may be the easiest and the most effective way for Meituan to secure a larger user base as it expands in the field where Didi Chuxing pretty much dominates the market. Meituan has already started its subsidy policy. In December 2017, users who had completed eight orders could be rewarded RMB 60 ($9.22), and those completing 13 orders could receive RMB 100 ($15.37). Meituan also offers some other subsidies during peak hours.

Meituan is ambitiously expanding and has announced in December 2017 that the firm had a team of over 200 employees to run its ride-hailing business. After its first testing in Nanjing that began in February last year, Meituan plans to roll out the service in seven other cities, including Beijing, Shanghai, Chengdu, Hangzhou, Fuzhou, Wenzhou, and Xiamen.

On top of that, in order to recruit more drivers, Meituan will give a three-month fee waiver for the first 50,000 drivers in Beijing, saying that the platform will not draw a portion from the drivers’ earnings.

All of these moves from Meituan reflect its determination to take on Didi. The war in the ride-hailing industry was assumably settled after Didi acquired Uber’s China operations in August 2016. Now with Meituan entering the battlefield, Didi’s position might be shaken. In October 2017, Meituan landed a $4 billion Series C round of financing led by Tencent and was valued at $30 billion.

Mobike, China’s major bike rental company, announced today that it will roll out its first ride-hailing service in Guizhou, marking the firm’s official attempt to expand outside of the bike rental business.

The first batch of the “shared” cars are all new energy vehicles and will be placed in Guian New Area and Guiyang City through a partnership with Xinte Motors (新特电动汽车, our translation). Mobike will add a car-hailing feature in its app, so users won’t need to switch between different apps to use the bike and car rental services. Users can rent a car, lock it, and make payments all within the app.

In October, Mobike partnered with Shouqi Limousine & Chauffer (首汽约车) to provide Mobike users a ride-hailing service operated by Shouqi. In November, Mobike reached a strategic partnership with another ride-hailing service Didapinche with Mobike adding a “Pinche (ride sharing)” feature in the app linked to the service.

Mobike isn’t the only bike rental player that is looking to provide ride-hailing services. In April, Didi Chuxing announced that it’s partnership with ofo and added ofo’s bike rental service in its app. Mobike’s move also shows that ride-hailing and bike rental services can naturally come together under one roof.

Most startups launched are destined to fail and it looks like another ambitious project in China has run out of luck. Inspired by motorcycle ride-hailing services such as Grab, Lude Chuxing or Donkey Ride (our translation) launched an app enabling residents to drive passengers on electric and gas-fueled motorbikes and three-wheeled electric cars known as “sanlunche.”

According to media reports, the app was downloaded more than 5000 times in its first day of operation. The app known as Didi for bikes was developed by a company in the Chinese city of Nanning and during its short stint, residents could see drivers in bright green vests driving passengers around the city.

However, the local transport authorities did not condone the entrepreneurial spirit of the drivers and Donkey Ride’s services were halted on December 18th due to violations of local transport services rules. According to regulations, owners of electric motorbikes should apply for registration which includes submitting the drivers’ identity card, vehicle certifications, insurance and other documentation.

Nanning’s residents were polarized around the new service. Some praised Donkey Ride as a dirt cheap and environment-friendly solution for avoiding traffic jams but others warned that many drivers were driving too fast and disregarding traffic rules.

Nanning in Guangxi Zhuang Autonomous Region in southern China is known as the “city of electric bikes.” The number of registered electric motorbikes reached 2.51 million units in July 2017, the highest number in China, meaning that the likelihood of traffic accidents is even higher.

Renting electric bikes has also come under scrutiny with several cities in China including Nanning, Shanghai, Hangzhou, and Zhengzhou banning the practice.

Didi Chuxing, China’s dominating ride-hailing giant, today announced that it has raised over $4 billion in a new equity funding round. Now having $12 billion in cash reserves, Didi has a valuation of more than $50 billion, making it one of Asia’s largest startups.

The new funding will be used to support Didi’s AI capacity-building, international expansion, and new business initiatives, including the development of new energy vehicle service networks, according the company’s statement.

Meituan, China’s leading food delivery platform, is determined to take on Didi, as Meituan is planning to expand its ride hailing service to seven major cities in China (in Chinese).

After testing the car-hailing business in Nanjing since February, Meituan is taking a step forward to challenge Didi’s dominant position in the sector by planning to roll out the ride-hailing service in seven cities, including Beijing, Shanghai, Chengdu, Hangzhou, Fuzhou, Wenzhou, and Xiamen, as reported by local media Caijing.

The war in the ride-hailing industry was assumably settled after Didi acquired Uber’s China operations last August, making Didi the dominator in the sector. However, with Meituan entering the battlefield, Didi’s position might be shaken. In October, Meituan landed a $4 billion Series C round of financing led by Tencent, and was valued at $30 billion.

It’s worth noting that Didi is reportedly working toward the launch of a food delivery service—one of Meituan’s core businesses. Meituan has a large scale of offerings, including food delivery, group buying, hotel booking, and even movie ticket sale, while Didi’s business has mainly been revolving around ride-hailing service.

Didi Chuxing, China’s ride-hailing giant, has ended its US experiment and has halted its app service in the US. Instead, Didi says that the company encourages users to download Lyft—Didi’s strategic partner in the US.

Didi has shown its ambition to expand globally after it invested $100 million in Lyft, Uber’s major rival in the US market, in September 2015. Since then, Didi has worked closely with Lyft, and in April 2016 rolled out the “Didi Haiwai” service—an experimental service where Chinese tourists in the US could hail rides operated by Lyft on Didi’s app and pay with Alipay or WeChat Pay.

Didi has confirmed with TechNode that American users are currently unable to use the app in the US and “are encouraged to download and use the app of our partner [Lyft].”

“From the feedback we collected, the service indeed made it more convenient for frequent travelers between China and the US, and we saw huge market needs here,” Didi told TechNode. “It has been a great cross-border experiment, where we’ve earned some precious experience that’ll serve as a good reference for our future cooperation with Lyft and other partners.”

It’s no secret that Didi is ambitiously looking to expand globally. The firm in March launched a self-driving research lab in Mountain View, California. Additionally, Didi has built a global partnership network covering almost every major player around the world, including Ola in India, Grab in Southeast Asia, Lyft in the U.S., 99 in Brazil, and Taxify in Europe and Africa. The network, according to Didi, now covers over 1,000 cities in the world and reaches 60% of the world’s population.

“DiDi would like to take a more active approach to internationalization. It is planning to land in other markets independently or through partners,” said Didi.

Most recently, Didi landed $5.5 billion in its latest round of financing in April, marking a step forward for the company to tap into the global market.

China’s ride-hailing giant Didi Chuxing announced today a strategic partnership with Taxify, a leading ridesharing company in Europe and Africa.

Under this partnership, Didi will invest in and collaborate with Taxify, according to a company statement. But the firm did not disclose the specific amount involved. Taxify will utilize the funding to expand its presence in core markets in Europe and Africa, the statement noted.

Launched in Estonia in 2013, Taxify is the fastest-growing ride-hailing company in Europe and Africa, offering taxi- and private car-hailing services to over 2.5 million users in major hubs across 18 countries, including Hungary, Romania, the Baltic States, South Africa, Nigeria, and Kenya.

The tie-up marks a new addition to Didi’s anti-Uber alliance along its global expansion initiative, only that the new deal spread the rival geographically to new markets in Africa and Europe.

“We’re definitely going global,” said Didi Chuxing president Jean Liu in a previous interview. And the company is moving fast towards that direction, each partner/region at a time. Didi invested 100 million USD in Lyft, Uber’s main competitor in the U.S. market, in September 2015. The battle has also expanded to Southeast Asia through investments in Ola and Grab and to Brazil through investment in local ride-hailing leader 99.

Cheng Wei, founder and CEO of Didi Chuxing, said: “Taxify provides innovative, high-quality mobility services across many diverse markets. We share a strong commitment to harnessing the power of mobile technology to satisfying rapidly evolving consumer demands and revitalizing traditional transportation industry. I believe this partnership will contribute to cross-regional smart transportation linkages between Asian, European and African markets.”

According to data from the company, Didi offers now provides service to over 400 million users in more than 400 cities.

Mobike’s recently-announced data sharing strategy has just made a prominent appearance: Mobike – and Ofo – bikes are now visible and unlockable via the Baidu Maps app. The latest update of the app allows users to log in with their mobile numbers to hire bikes from the two main hire companies.

The latest version of Baidu Maps, v9.8.5, has a bike and ride logo in the top left which, when tapped, reveals bikes from both Ofo and Mobike in the area of town shown. There is the choice to filter just one type or see all.

The unlocking process is simple and having bikes from both main companies now available in one place is definitely a step forward for customer ease of use, which was part of Mobike’s data strategy. Branding is kept to a minimum except on the bike map and filter page.

Bike rentals are starting to be included in the map’s journey-planning functions, as they were with Shenzhou Zhou ride-hailing. This does not yet appear to be fully operational in this first release, but the bike rental option is available to toggle on/off within walking and cycling journeys. Previous reports on bike usage show that rides in combination with public transport are hugely popular with 1 in 5 rides being to make a bus or subway connection, so this function is expected to be warmly welcomed.

Last month Mobike announced its “Mobike+” open platform strategy which covers the three areas of “life circles” (our translation of “生活圈”), big data and Internet of Things. Shenzhou Zhuanche and Baidu Maps were announced as being in the first batch of integrators, along with China Merchants Bank, UnionPay and China Unicom.

China Unicom lets users unlock bikes via its app and users can apply their loyalty system user history as credit for the deposit needed for joining the bike scheme; they can also use Wo points for free rides or to earn free data. China Merchants Bank is expected to offer the bike unlocking function soon via its app. UnionPay’s increasing global reach and its move into instant payments could help with Mobike’s global expansion, as are other recent updates by the bike company.

The fitness app Yuedongquan (悦动圈) also integrates with Mobike and collects ride data, even allowing users to compare their riding stats with those of their friends.

Opening up has proved a highly successful move so far for Mobike. In March this year they integrated with WeChat, the most pervasive of all social media apps. After this, the signup rate of new users grew by over 200% with over half of new users joining the scheme through the WeChat system.

The benefits go beyond new signups. Working across more apps offers allows the company to collect more data and being more readily accessible to users means more bikes being used. In terms of appearing on the same map as Ofo bikes, that could mean more effort put into bike redistribution or just another battle in the bike numbers war.

Didi Chuxing, the Chinese ride-hailing giant that swallowed Uber China, has announced the beta launch of bilingual functions on its app.

The service is now only available in the country’s three top metropolises of Beijing, Shanghai, and Guangzhou, where most foreigners live and travel, but the firm disclosed it will be available in other cities later. Starting today, users in the three cities will gradually have access to an English interface.

While the company plans to make the app 100% bilingual, it is first starting this feature for core services of Taxi (出租车), Premier (专车)and Express, including ExpressPool (快车and顺风车). The app also enables real-time, in-app instant text messaging translation between English and Chinese to facilitate rider-driver communication. Users will also have access to bilingual customer service support via email and phone.

Before this, the most prominent ride-hailing service in China was Mandarin only. When the company discontinued the English interface of Uber China last year, there was an outcry among China’s laowai (老外, a colloquial term for foreigner) community, who felt abandoned in the upgrade.

In addition, the Didi app is also making improvements in payments with support for major international credit cards. Users can sign up with mobile numbers registered in 12 regions of the world, including the Chinese mainland, Hong Kong, Taiwan, Thailand, the Republic of Korea, Japan, the United Kingdom, France, Australia, Canada, the United States and Brazil.

The move comes amid Didi’s globalization push. While the company is expanding progressively to overseas markets, it considers the “internationalization of mobility services in China . . . a crucial link in Didi’s broader global strategy.”

As an international economic and cultural hub, China increasingly attracts inbound foreign tourists, business travelers, and expatriates. According to Chinese tourism authorities, over 28 million international tourists visited the country in 2016, up 8.3% year-on-year, with over 1 million working and living in China.

Update, 08 May 2017, 1530: Yidao announced today it has obtained the online car-hailing license from Beijing Municipal Committee of Communications. Good news for Yidao as well as its users and drivers, as the acquisition of the license may help quicken the company’s fundraising pace since policy roadblocks have been cleared up.

The financial turmoil affecting ride-hailing service Yidao Yongche (易到用车) is still ongoing, although Yidao chairman He Yi noted that the company has achieved breakthroughs in financing and promised that Yidao will be able to let drivers withdraw payment through the app by the end of May.

Yet the cheerful message from the company chairman still failed to assure anxious drivers. There have been large crowds of drivers seen lining up at Yidao’s Beijing and Shanghai office eager to cash in their payment every workday since Yidao founder Zhou Hang made public a spat with company shareholder LeEco one month ago. There were reportedly more than 300 drivers rushing to Yidao’s Beijing headquarters on April 18 alone.

There have also been rumors that Yidao would consider asking its users to top up membership fees of the company controlling shareholder LeEco’s video streaming unit with the remaining funds in these users’ Yidao accounts if the company failed in its financing endeavors.

Yidao has also said that their telephone hotline is no longer available. They said that users can contact customer service online and wait for a call-back.

While the company has been teetering following the recent cash squeeze and the departures of the company’s three co-founders, there have been concerns that the implementation of the upcoming new industry regulation will deal the firm another blow.

According to regulations on ride-hailing services released last December by the Beijing and Shanghai governments, drivers for ride-hailing services must have local household residency, and vehicles they use must be registered with local car plates. Beijing has given affected companies a five-month grace period set to expire soon.

While competitors including Didi Chuxing (滴滴出行) and Shenzhou Zhuanche (神州专车) have obtained their online ride-hailing licenses in succession, Yidao has yet to get its own to date.

In addition to difficulty in paying drivers, Yidao has also defaulted on payments to third-party suppliers including car-rental companies and app promotion partners.

Although Yidao claims that it has applied for a license with Beijing transportation authorities in March and expected it to be approved soon, it is unknown whether the besieged ride-hailing service can obtain the license, given its current cash strain.

In contrast, ride-hailing service giant Didi Chuxing recently has finalized a funding round of over US$ 5.5 billion, pulling further ahead of cash-strapped Yidao.

Zhou Hang, founder and CEO of ride-hailing service Yidao Yongche (易到 in Chinese), admitted yesterday in a statement that the firm has cash problems. He blames this on its controlling shareholder LeEco diverting to other purposes an RMB 1.3 billion fund originally earmarked for the firm, our sister site TechNode Chinese is reporting.

Zhou made the statement in response to a stream of negative publicity about the firm’s troubled operations recently.

Rants and complaints against the ride-hailing service have kept growing over the past few months. Drivers of the ride-hailing service feel aggrieved for being unable to receive their payments from the car-hailing platform, while passengers grumbled that there are often no cars available even if they opt to pay higher fees for their trips, and found it difficult to have their prepaid funds refunded.

Yidao was the runner-up with a mere 3.6% share in the ride-hailing market last year  (in Chinese) dwarfed by the 94.6% share of marker leader Didi Chuxing (滴滴出行 in Chinese).

To fend off intense competition from rivals and expand its own presence, Yidao had to resort to a strategic investment from outside investors to fund its subsidy campaigns, a common practice seen in the car-hailing market in the past few years. In October 2015, internet giant LeEco’s automobile unit LeSEE bought a 70% stake in the firm, becoming its controlling shareholder.

As of the end of last June, the firm had attracted a whopping RMB 6 billion in deposits from 6.53 million customers in its 227-day 100%-rebate campaign (in Chinese).

Yet the high subsidies offered to drivers and customers have led to a strain on the cash flow of the firm, and the situation has gotten even worse when its majority shareholder LeEco itself has faced a big cash flow squeeze since last year suffering from excessive expansion.

There have been reports that LeEco delayed payroll for its U.S. employees this month and scrapped its planned US$2 billion acquisition of U.S television maker Vizio Inc, signs that the technology giant has been embroiled in a cash crunch.

Although LeEco has recently managed to secure an RMB 15 billion funding program from real estate titan Sunac, it seems the beleaguered internet titan still has trouble getting their arms around the mess of the car-hailing service.

What Yidao is facing is not a mere creditor’s rights dispute, but may be a mass incident hampering social stability, Zhou warned.

Zhou has gradually faded out from the management since the firm was controlled by LeEco and recently rumored to have left the firm to Shunwei Capital, a VC firm set up by Xiaomi co-founder Lei Jun.

In response to Zhou’s statement, Yidao and LeEco have refuted the cash diversion charges in a joint statement last night and said they have injected roughly RMB 4 billion in the car-hailing platform to bolster the firm’s development.

According to LeEco, the RMB 1.3 billion in debate is part of an RMB 1.4 billion syndicated loan to Yidao, which LeEco pledged its real estate LeEco Mansion as collateral. The parties have agreed to use the loan for daily capital turnover of LeSEE and Yidao. Of the total amount, RMB 100 million will use to fund Yidao’s  business, while the balance goes to LeSEE. LeEeo considers Zhou’s remarks to be a smear, as Zhou has had knowledge of the matter, and signed up to the contract.

While the loan specifics remain to be confirmed from banks, an industry observer advised that LeEco should act swiftly to head off the war of words and help Yidao out, whether through new external financing or its own capital injection.

It’s no secret that Chinese ride-hailing behemoth Didi Chuxing is planning something big for overseas market, but as of present all of its moves are achieved through partnership and investment in regional players of these markets. The company has yet to build an offline existence beyond its home country. But the case won’t be long.

The firm, which acquired Uber’s China operations last year, today officially announced the launch of its first bricks-and-mortar office outside of China, dubbed DiDi Labs, in Mountain View, California.

Through a series of partnerships and investments, Didi has built a global ride-summoning network that’s covering every major player around the world, including Ola in India, Grab in Southeast Asia, Lyft in the U.S., and 99 in Brazil. Given Uber is in competition with each and every of them in different regional markets, many jokingly referred this network as the “anti-Uber alliance”.

However, this latest move is of more strategic meaning than just gaining the upper hand. Focusing primarily on AI-based security and intelligent driving technologies, the new lab underlines the company’s efforts into a new field—self-driving. It’s worth to note that the lab’s Mountain View setting puts it in the backyard of leading self-driving companies as well as a pool of the world’s top talents.

Didi Labs will be led by Dr. Fengmin Gong, who became Vice President of Didi Research Institute after his company AssureSec was being acquired by Didi last year.

Dozens of leading data scientists and researchers have joined the team. Among them was Charlie Miller, who made his reputation as the world’s top automobile security experts in testing, in which he and Chris Valasek hacked remotely into the operating systems of a Jeep and took full control of the car.

The lab’s current projects span the areas of cloud-based security, deep learning, human-machine interaction, computer vision and imaging as well as intelligent driving technologies.

Meanwhile, Didi Labs will work in tandem with the broader Didi research network to advance its global strategy, apply research findings to products and services, and help cities develop smart transportation infrastructure. Didi expects to rapidly expand its US-based team of scientists and engineers over the course of the year, the company noted.

Cheng Wei, founder, Chairman and CEO of Didi Chuxing, said:

“Sweeping changes are taking place in the global transportation and automobile industries. As the world’s leading mobility platform, Didi has invested in five industry leaders around the world. Building on rich data and fast-evolving AI analytics, we will be working with cities and towns to build intelligent transportation ecosystems for the future.

As we strive to bring better services to broader communities, Didi’s international vision now extends to building the best-in-class international research network, advancing the global transportation revolution by leveraging innovative resources. The launch of Didi Labs is a landmark in creating this global nexus of innovation.”

The truce between Didi Chuxing and Uber China seemingly left the Chinese ride-hailing titan the sole dominator in China’s highly lucrative market. However, it has opened up new opportunities for other surviving local ride-hailing companies. It would seem that there’s no way for a single company to gobble up the entire Chinese market as a whole, even if it’s Didi.

UCAR, a prominent rival of Didi in China, announced this week that it raised RMB 4.6 billion in new funds from four investors including China’s interbank network, UnionPay. The company already boasts investment from high-profile players, including Warburg Pincus and Jack Ma.

Different from Didi that relies on private cars and crowd-sourced drivers, UCAR offers its services with an in-house fleet and licensed drivers. These drivers offer UCAR a way to potentially increase margins and avoid government questions about their legal status.

The firm currently operates four product lines: Car. Inc, their Hong Kong-listed car rental arm, Shenzhou Zhuanche, the chauffeured car service as well as an online car marketplace and a car loan service. Lu disclosed that the company is considering to explore new fields given all of its businesses are going to record profits this year, adding that car manufacturing is a possible option.

It’s worth nothing that the funding announced this time is only half the size of the firm’s RMB 10 billion private placement plan announced in last October.

However, board chairman Lu Zhengyao told local media (in Chinese) that more funding will follow and the total financing will be over RMB 7 billion RMB (around US$ 1.02 billion). He added that the funds will be used for marketing, recruitment, offline outlets, and fleet procurement.

Like many Chinese tech startups, UCAR is listed on the Chinese over-the-counter (OTC) market. It was the first of its kind when it was listed in in September last year and is now valued at RMB 40.93 billion. Didi is still preparing for its IPO and no specific timetable has been announced.

Despite the fierce competition and government constraints, local companies keep fighting their way into to China’s ride-hailing market. LeEco-backed Yidao is also targeting the gap that’s being left by Uber’s retreat.

In addition to the old players, new entrants continue to flock to the sector. China’s top O2O titan Meituan added a car-hailing function into its app to complement the existing services from food delivery to ticket booking. Chinese car manufacturer Geely has also expanded its ride-summoning services Caocao Zhuanche to more cities.

When Didi and Kuadi merged, and again when Didi merged with Uber, many predicted that the battle in Chinese ride-hailing industry was coming to an end. As things are now, the market is more mature, but the war may not be over.

Didi and Uber’s billion-dollar merger completed last August was assumed to have finally settled the ride-hailing war with Didi as the sole dominator in the Middle Kingdom. However, the peace brought by the truce between world’s two largest ride-summoning services is short lived as well-grounded local rival Meituan has announced they are entering the battlefield.

On Tuesday, China’s top O2O titan Meituan added a car-hailing function into its app, which now features a wide variety of services from food delivery, film tickets, hotel reservation and flight/train tickets.

After finding the ride-hailing service in Meituan’s home page, users in Nanjing can book their trips in an interface and operation process very similar to Didi’s. Payments can be made with bank cards, WeChat or QQ Wallet.

Meituan’s entrance into the ride-hailing industry is quite unexpected given that the internet giant is mainly focused on local lifestyle services. The company has kept a low profile when talking about the new service, only explaining to local media that the feature was added to fulfill rising demand from users.

Meituan has plans to spread the service to more cities, but hasn’t released a timetable for the expansion.

Meituan, now more commonly known as Meituan-Dianping after its merger with once competitor Dianping, has some tricks up its sleeves in competing with the already established players led by Didi.

Meituan-Dianping now claimes to be the third largest e-commerce platform in China, next only to Alibaba and JD. The company has registered over 600 million users with monthly active mobile users hitting 180 million, a company rep told TechNode. This huge user base is expected to bring traffic to the service.

Additionally, nearly all the services that Meituan provides is directly related to intercity transportation services. This could enable an easy transition from one service to another within the app.

Last year, Meituan’s legendary CEO and Chinese internet opinion leader Wang Xing, put forward a proposition that Chinese internet is entering the “Second Half”, believing that “. . . only deep integration can lead to full transition [from the first to the second half].”

Integrating ride-hailing services could be considered in line with the proposition to penetrate other related services. In addition, the company has acquired Qiandai, a third-party payment startup, to make inroads into online payment sector.

This post is updated on 13:48 February 15th to change some of the operation metrics of Meituan-Dianping.

This is the third post in our series: Discover China’s Next BAT, where we will go over the potential tech giants that are leading China’s IT industry. Previously, we looked at the next BAT and their founders. Stay tuned to keep updated on the next BAT.

iiMedia Research Group, a leading research institute in China, has released a list of leading mobile internet companies based on the findings of a corporate judging panel consisting of global industry experts, influential investors, and public voting with over a million ballots cast.

From that list, we have chosen eight companies we believe will dominate their markets. Here are the first four:

1. Xbed（搜床科技）- internet hotel

Xbed provides self-service hotels rooms. Here, self-service means a literally no service staff, no front desk, or security personnel. Using Xbed, users can rely completely on Xbed mobile app (or its WeChat account) for the whole stay from reserving the hotel room and checking in and out to opening and locking of the room door and payment.

Founded in May 2015, Xbed is said to bring a sharing economy model into the accommodation industry as it allows people who have worked in accommodation industry to be part-time workers to help with the cleaning.

2. Douyu TV (斗鱼) – live broadcasting

Founded in 2014, Douyu TV is one of the earliest live-streaming platforms among more than 200 Chinese streaming platforms that have popped up. The market is estimated to be worth US$ 5 billion (RMB 34.4 billion) in 2017.

Attracting investment from gaming giant Tencent, it has been dubbed the Chinese Twitch.tv with many top streamers playing MOBAs (multiplayer online battle arenas) similar to League of Legends. This has fueled the game’s continued popularity with the company now claiming over 100 million registered users, including 15 million daily active users (Twitch, for comparison, claims 100 million monthly users).

Last year, it secured more than RMB 2 billion yuan (about US$ 13.7 billion) in funding. The round reportedly pushes Douyu TV’s valuation above US$1 billion, making it yet another Chinese unicorn.

Although its strength is still in game broadcasting, it is also producing its own content.

3. Inke (映客) – live internet broadcast

According to the Cyberspace Administration, in November there were more than 300 live streaming companies in the mainland. The China Internet Network Information Center reported in June that there was a total of 325 million live streaming users in China, comprising 45.8 percent of the total internet user population. Inke is a live-streaming app where users earn money from their content.

Inke has a quite interesting way of monetizing.  Viewers can send virtual gifts to hosts through in-app purchases. The host receives 30 percent of the gift’s value, which encourages them “to produce high-quality content”, while also keeping the platform profitable. Hosts can also “enhance the viewing experience” by adding interactive stickers.

By its entertainment promotional efforts, for instance, broadcasting live shows for a popular South Korean band called Big Bang, Inke’s downloads and revenue started to ramp up and even made it to the seventh spot on App Annie’s worldwide revenue rankings of iOS and Android apps in April 2016.

4. Yidao (易到用车) – vehicle sharing

In 2010, before there was a Didi or Uber entered China, Yidao was the first to start ride-hailing business. Six years later, it is not first in terms of market share, but Yidao still provides car services in 74 cities in China and 24 cities in the United States, has 1.35 million active users and a market value of US$ 15 billion.

After Didi announced its acquisition of Uber’s operations in China last year, there was even a joke that Yidao had finally jumped from third to second place in the market. Although the pioneer of the market, Yidao had always struggled with the rise of Didi and Uber China, which became popular on the back of heavy subsidies and cheap prices.

In fact, new regulations in the ride-hailing business after Chinese authorities finally legalized car-hailing apps in July 2016 might be a good news for Yidao. The new regulations by the government stipulated that unfair competition—giving heavy discounts and subsidies for services at below-cost price—should stop. In other words, Didi may not be so cheap as it always had been for many consumers, while affect on Yidao is probably minimal as Yidao targets on offering premium services at higher prices.

In the tech industry, new innovations are constantly supplanting old ideas and seemingly stable companies can find themselves facing unexpected challenges.

However, the trends we saw started in 2016 posed questions that have yet to be answered. Here are eight of them we think will be answered in 2017.

1. Can Alipay effectively deter the aggressive rise of WeChat?

Considering that Alipay has been trying hard to make Alipay a something more than just payment platform; a social community, what kind of strategies will actually attract users to use Alipay for engaging with other users?

2. How will competition between China’s bike-rental platforms, Mobike and Ofo, play out?

Which one will become more dominant? Around the end of 2016, Ofo had officially entered Silicon Valley while Mobike entered Singapore. We’ve talked a lot about these two companies and bike-sharing (actually bike-rental) in 2016. Will they be able to gain a meaningful presence in foreign markets? Will they actually survive until the end of 2017?

3. How will LeEco’s car business develop?

LeEco is probably the most argued-about company in China, especially regarding its financial status. Starting off with its reconfirmation of partnership with Faraday Future and introduction of brand-new electric cars, LeEco is expected to make lots of things clearer in 2017. The latest news is fresh funding of 16.8 billion yuan ($2.4 billion) from real estate developer Sunac . How that will impact the company’s transportation plans is still unclear.

4. Will WeChat’s newly-launched mini-apps replace actual apps in China?

It is not impossible considering the fact that websites were replaced by WeChat official accounts. Also, it is expected that before long, the number of mini-apps will sky-rocket. However, there is already a backlash occurring as users question their use and relevance. Will these mini-apps actually replace their bigger brethren?

5. How will Alibaba push the envelope on this year’s Singles Day?

Granted, this is still some time away,  but Single’s Day is always something to be excited about. In 2016, Alibaba created an AR game similar to Pokemon GO where users could find hongbao (红包 or lucky money in English) by capturing the Tmall cat mascot. It seems that every year we ask if they’ll be able to top last year and every year they do. We’re already getting excited to see what they have planned for this year.

6. Will Baidu be able to catch up to Tencent and Alibaba?

With the stunning successes of Tencent and Alibaba over the past few years, Baidu seems to have lost much of its steam as its services are replaced by big and small competitors alike. However, rather than position themselves as a leader in consumer technology, Baidu is refocusing on developing proprietary technology such as AI and AR.

7. Will Didi overcome troubles caused by unexpected regulations imposed by municipal government?

New rules late last year may hamper Didi’s China operations. Big cities, including Beijing and Shanghai, now require that all drivers have a local hukou (户口 or household registration in English) and that the vehicles be locally registered. According to Didi, these new restraints could eliminate nearly 80% of the company’s Shanghai vehicles and potentially put the breaks on Didi’s ride-hailing business.

8. How many more global acquisitions will Chinese companies make?

In 2016, notable cases were Tencent acquiring Supercell, a Finnish game publishing company and C-trip acquiring Skyscanner, a British travel information website.

Half a year after Didi and Uber struck a truce in the Chinese market, another land-grab between the two is looming, only this time the battle is for the global market.

Didi Chuxing announced on Wednesday that it has made a strategic investment in 99 (formerly 99Taxis), an Uber competitor in Brazil market. The company didn’t specify the investment size or number of shares involved in the deal.

Under the terms of the partnership, Didi will assume a seat on 99’s Board of Directors and will provide strategic guidance and support, including in the areas of technology, product development, operations and business planning, according to a company statement.

Founded by young Brazilian entrepreneurs in 2012, 99 offers an app-based on-demand private car and taxi-hailing services across 550 cities in Brazil, the world’s second fastest-growing internet market. 99 has over 140,000 registered drivers and more than 10 million user downloads. They maintain a leading position in Sao Paulo, Rio de Janeiro, and other tier-one cities across Brazil.

Peter Fernandez, CEO of 99, said, “We welcome Didi to Latin America. Didi’s financing, state-of-art technology, and operations knowledge will play a key supporting role as 99 actively expands our network and services in Brazil and reshapes the competitive landscape in Latin America.”

Uber retreats from China, Didi goes global

Didi is the dominant player in China’s ride-hailing market with close to 400 million users in over 400 Chinese cities. However, the Chinese company won’t stop at conquering its home country, as Didi’s president Jean Liu said at a Vanity Fair event last October— “We are definitely going global”.

In line with its globalization drive, the heavily-loaded company has already reached a strategic partnership or invested in several regional ride-hailing leaders across the globe.

Didi invested 100 million USD in Lyft, Uber’s main competitor, in the U.S. market in September 2015. The tie-up generates several avenues of cooperation, such as allowing users to summon rides through each other’s network. Didi is also expanding aggressively in Southeast Asia with investment in Ola and Grab.

Didi’s global expansion puts it in direct competition with Uber; their partnership between the four companies is widely considered as an anti-Uber alliance. With the latest investment in 99, the alliance has expanded to Latin America.

For a time, Didi’s acquisition of Uber China cast the alliance into doubt. However, after the taking solid control of the domestic market, global expansion is now a top priority and consolidating the alliance makes more sense for the company.

In Wednesday’s announcement, Cheng Wei, founder and CEO of Didi Chuxing, highlighted thei cooperation with more global partners:

“China and Brazil are the world’s foremost emerging markets with enormous opportunities for our rideshare industry. Partnering with 99, the local market leader, Didi will begin sharing capabilities and products with more diverse communities and innovators. . . . We look forward to working with more global partners in creating better mobility services and more work opportunities for our cities, as we reshape together the future global transportation system.”

Image credit: Shutterstock

Didi has suffered a bolt from the blue, as Beijing, Shanghai, and Shenzhen each rolled out specific regulations for the car hailing business on Saturday. The rules are harsh, to say the least, and has brought the ride hailing behemoth to its knees, arguing for possible remedy from the authorities.

The newly published draft interpretations from the three largest cities–all with tremendous migrant populations–have stipulated that drivers must of local Hukou, or family register. This is a heavy blow for Didi, as it eliminates more than half of the drivers in Beijing and Shenzhen, and dispels an overwhelming majority of Shanghai drivers from the platform.

The draft laws from these cities also raised the bar for cars in the business. Didi bemoaned that the higher standards would disqualify more than 4 out of 5 existing vehicles.

Artificially holding down supply would “more than double prices”, and the waiting time for rides would increase from the current 5 minutes on average to a whopping 15 minutes, warned Didi.

It also threatened of the adverse effects of droves of unemployed drivers, which could pose a “mass risk”and become a “social unstable factor”. Naturally, in a state of desperation, the company pulled out its trump cards– “innovation” and the “sharing economy”, both espoused by the premier himself, and predicted that such measures would brutally crush the buds of the sharing economy.

“Didi sincerely urges local governments and authors to give citizens with and without local Hukou equal employment rights. We should not let citizens lose heart and passion in innovation and entrepreneurship”, appealed the company after the new regulations rolled out.

Perhaps the most fatal of blows is the rigid Hukou specifications. “Of the 410 thousand registered drivers in Shanghai, only 10 ten thousand have a Shanghai Hukou” bleated Didi in a statement. However, these figures may be exaggerated for its own convenience, creating a victimized image and implying more severe consequences. Only 30% of Shanghai drivers were nonlocal, according to Didi’s“Mobile Transportation Employment Promoting Report” published last month, as it congratulated itself on the ability to attract local drivers who are better acquainted with roads.

More than 65% of the drivers in Shenzhen and more than 50% of that from Beijing do not possess a local Hukou, the report found.

Once the guidelines, which are still in an opinion solicitation phase, kick in, cars on the platform must have a vehicle age under 2 years, a wheelbase longer than 2700mm, and an engine capacity of more than 17.25L–specs that mid-high end cars are more likely to meet.  On the bright side, this means there were be fewer creaky manual-windowed surprises pulling up when you hail a ride.

Unlike the desolate future which Didi fears, with all but luxury sedans plucked from the platform, Technode has found that it’s possible to get qualifying Chinese models that cost as little as 80 thousand Rmb.

Just how much leeway do these local draft regulations leave before they are set in stone? That remains a question. The company has proved that it carries a lot of clout–surprise, some of the top executives in the company like Zhang Bei come straight from the government bureau of transportation– Didi’s outspoken objections to the national draft for car hailing led to an eventual version which are largely in favor of the company. Didi’s recent buyout of Uber China has been (so far) exempt from anti-monopoly investigations, again attesting a solid relationship with the authorities.

But these local interpretations have clearly come as a shock, or at least a case of  failed lobbying on the local level. Will the law be in favor of Didi in the China’s mega cites? Though Xinhua has published an commentary proposing that draft laws should leave “windows for revision” and emphasizes that even “provisional guidelines” are subject to modifications, the window of opportunity this time is short. Suggestions and objections to the draft must be made within one month, while Beijing left merely a week-long opening for rants and complaints. Didi had better start pulling some strings, or hold its peace–at least for the time being.

Didi-Uber, China’s newly minted transportation tycoon, has revealed intentions to append a bike sharing service to its hefty platform, as it pours tens of millions of U.S dollars in strategic investment into dockless smart bike company Ofo.

The ride sharing company has no trouble divining a future where bike sharing becomes the latest installment on its platform, already laden with everything from buses to chauffeur services. Among cooperation in urban rideshare, Didi also plans to be “offering quality bike-sharing experience on Didi’s platform,” said the company as it announced the investment. 

Ofo claims to be world’s first dockless bike sharing services–unlike many public bike systems that set aside a multitude of procured bikes for common use, the company founded by 5 Peking University students is attempting an Uber-like light asset approach. Users are encouraged to donate their personal bikes to Ofo in exchange for unlimited access to bikes in Ofo’s pool.

Yet Ofo seems less than prepared for a full blown presence on Didi’s platform. The company’s conspicuous yellow bikes are currently available only in select university campuses, only accessible after registration with a student ID, and once students are done pedaling, the bikes have to end up within university gates. A spokesperson from the company said that there were no definite plans to expand their system to outside  campuses, and that a deliberation to do so depended on “range of factors”.

It’s not hard to see why Ofo is getting cold feet, even as a flood of capital from the impatient investors prods this utopian model forward to enter the real world. 

For one, Ofo’s going rate is 0.01 yuan per minute and 0.04 yuan per kilometer,  (hence a 5 hour, 5 km ride would cost 3.2 yuan, or less than 50 U.S. cents), even cheaper than Mobike’s 2 yuan or 0.30 USD per hour, which has already been subject to skepticism  over its ability to turn a profit.

In the past months that bike sharing has been in the limelight, reviews have been not at all encouraging: unadjustable seats, system errors unlocking the bikes though QR codes, the sheer difficulty in locating a bike within walking distance, and the fact that they are downright heavy if you need to carry them up a flight of stairs. Users’ patience is becoming threadbare, so say the least. 

Though we have to give Ofo credit for cutting procurement costs by pooling together bikes, in a less than idealistic society, their model could end up as a textbook example of Gresham’s law: who want to trade in their multi gear mountain bike to ride around on creaky old two-wheelers, considering they only cost about 2 yuan per ride? Even the cheapest bike costs around 500 yuan ($75 USD) today, so when users do the math, would it really pay off to swap a personal, albeit used bike for “lifetime membership” for bicycle collectives?

Not to mention the amount of or wear and tear or malicious vandalism that the bikes undergo. It is distressing and hard to believe that with China’s per capita GDP of nearly 8000 USD, some of these bikes have had their QR codes scratched out, other padlocked, and others still collected to be sold as scrap metal. As tech savvy as these bikes may be, they’ve not yet cracked the code to poor citizenship behavior.

Didi and Uber have pioneered the sharing economy in China, and with their all-out competitive melee finally resolved, they can focus on doing what they haven’t yet been able to: turn a profit using one of the world’s newest and most exciting business models.

But how disruptive is the ride hailing business in China really? Agreements with rental companies, dual-user accounts and predatory loans all point to a less impressive reality: Didi and Uber are struggling to build a profitable ride-hailing model, and now they’re playing a big role in rebuilding the industry they set out to disrupt.

‘Drive-To-Own’ Programs: Introducing The Brand New, Revolutionary… Taxi Business

The idea is this: a driver who wants a car signs a two or three year contract with the company to receive a vehicle lease, and in return the driver will pay a three to four thousand monthly fare–termed a ‘revenue sharing arrangement’ (sharing is still the magic word here). Sound oddly familiar?  As the contract ends, the drivers, who are considered Didi employees, close with a one-off payment, before the car (but not the license) is theirs for keeps.

What started as a pilot program launched several select cities is spreading it own wings, and in many localities, car dealerships are introducing their own packages, offering an account registered under the dealership, a handful of models to choose from, an option to bail out at any time, and possession of the car in two to three years (according to our math).

Mr. Shen, a car dealer in Zhejiang province told Technode that such programs are more like final call for anyone who wants to join the Didi bandwagon.

“As the regulations roll out, Didi’s business has to be more standardized, more and more like a taxi company, they won’t allow just anybody with a car to join, the vehicle has to be registered under [a company like] us.”

Sign on plans advertised in driver chat groups pitch the same: “for 4888Rmb a month, this is the best deal you can get before regulations fall into place.”

According to Mr. Shen, it doesn’t actually matter if you take passengers on Didi or Uber, as long as you pay the monthly installments. “Several cities have come out with quotas for online cars. Better secure a slot early so you at least have the choice (to drive for the platforms), ” he said,  referring to different local interpretations of  the recent draft regulations.

Didi spins this initiative as a way to lower thresholds for drivers without a private car to work for the platform, creating jobs and enabling fair access to opportunities. The drivers who have signed on don’t see it that way, especially as subsidies dwindle.

“I signed up for a 3 year deal, but with the kind of subsidies I’m getting these days, I don’t know how I’ll cope…I’m paying 4500 a month. ” grumbled Didi driver Mr. Li, in Beijing, behind the wheel of his rented black BYD sedan. He’s making  8,000 yuan (1198 USD) monthly before gas and rental fees, a stark downgrade from the 16,000 yuan he was making three months ago when he first joined and the subsidies were lush. “I’m working 12 hours a day just to make ends meet”, he sighed.

A sense of exploitation is mirrored in Uber’s Xchange car leasing program, which launched last year in the U.S.. In a Bloomberg report, auto finance experts said that the plan was “predatory” and that the terms were more about profiting off drivers than increasing the number of Uber vehicles.

‘Strategic Cooperations’ With Rental Agencies

When Uber froze Chen Shuai’s account, he had reason to fidget: he was paying 8000 Rmb a month to rent his Roewe 550, and each day he wasn’t taking on passengers, money was going down the drain.

Mr. Chen’s attempts in the following month to reason with Uber staff was fruitless, with customer service replying that it was up to advanced back-end teams. Out of desperation, he turned to his car rental company, eHi car services, as a last resort, and to his relief they seemed to have a solution.

“The ‘driver manager’ said eHi had friends in high places, and they could contact Uber to reactivate the account, for a price: 700 yuan”, recalled Chen.

Later, the manager came back with the diagnosis–there were multiple drivers sharing one account, a breach of Uber’s rules.  Miraculously, his account was reactivated a few days later, only to be deactivated again. This time his rental company shrugged off his predicament, though another rental company approached him to offer help – for 700 yuan.

Though both Didi and Uber have denied that car rental companies have any  access to manage accounts from the back end, Another driver in Shanghai, Mr. Ye, corroborates Chen Shuai’s story. “There are people who specialize in this”, said Mr. Ye, speaking from his personal experience, “all I need to do is holler in the chat groups about my frozen account, and people will approach me with a price and offer to help me out.”  He also had his account unfrozen by his rental company, though he says its unclear what these people had in association with the platform.

When Didi announced an official entrance into the car rental business on Friday last week, reiterating its light asset approach, eHi was mentioned as a case in point, in other word, they would be renting eHi’s cars.

The platform said it would collaborate with rental companies in vehicle sources and management.  With uncertainties in local regulations, Didi and Uber’s most reliable partners are car rental companies, who owe much of their revenues to platforms.

It seems that in a few years, most of the Didi or Uber drivers on the roads could be employed through a rental company- they already seem to be very much managed by them.  In that sense, wouldn’t that just be putting the disrupted taxi scene back together again?

Who’s Really In The Driver’s Seat?

In the age of car hailing, that should be a no-brainer. Your driver’s personal details should be stowed safely away in a server someplace, and some of those details should be at your fingertips: his phone, license plate and part of his name. Or is it?

In some cases, there’s a significant chance that the person behind the wheel is not registered with the platform – untraceable should they commit a crime, and impossible to lodge a complaint against.

Both Mr. Chen and Mr. Ye, for instance, both admitted to sharing an Uber account a few months back. “eHi had us covered, they registered our accounts for us, and we would be paired up with another driver taking shifts, ” said Mr. Chen.

“But that was before the platform had explicit rules against it,” he added.

According the Mr. Ye, both the drivers and car rental companies have every incentive to bend the rules. The cost of renting a car in Shanghai ranges from 6500 to 8000 yuan, that’s a lot for one driver pay off alone. If getting two people to share one vehicle and one account means that rental companies can rent out more cars, they will hand you the keys with a wink and a nod.

With lowered subsidies, for many local drivers, it no longer pays off to stay in the game. Mr. Li told us that over half the people in his driver WeChat group were pursuing better paying work. But a 6000-8000 yuan monthly salary is still attractive for those from surrounding second and third tier cities.  For drivers with out-of-town plates, a local plate and matching identity is just a few hundred kuai away.

Mr. Ye introduced Technode to an account ‘scalper’, who charges around 700 yuan for a Shanghai license-plated account, no additional paperwork needed. However, this scalper declined to reveal the origin of his accounts.

If you’re not as resourceful as this scalper, Taobao runs rampant with pseudo account services, which guarantees a swift and and solid solution to difficulties across the board: insufficient driving experience? Driving a dated model? Is the platform giving you lower pecking order because of your out-of-town license? All that can be taken care of within a few hundred yuan, and with a pseudo identity, you could be an ex-convict for all that the these troubleshooters care.

Didi’s acquisition of Uber China lifted the curtain for the ride company’s post-unicorn era., and it deserves credit for many things: gobbling up its fiercest competitor, building a better government relationship (including snagging a ministry of  transportation officials to become their vice president), and successfully lobbing for a nationwide green light on their business model.

But what it has yet to do, like many others before, is come up with a solution that is substantially beneficial to all parties -drivers, passengers, rental companies, taxi businesses and local gov’t all without relying on cash as fuel.

Based on an original article from Technode Chinese site.

It’s one of the biggest tech deals in China’s history, and now it’s being investigated by the country’s antitrust authorities.

China’s commence ministry has launched an investigation into Didi Chuxing’s milestone acquisition of Uber, because the Chinese ride-hailing company failed to declare the transaction.

The recent deal bring’s Didi’s total value to approximately $36 billion USD, however they failed to declare the deal to antitrust authorities because their revenue is below the threshold required for a review, the Wall Street Journal first reported.

It highlights the challenging regulatory space that tech companies occupy. Like Uber, Didi has been engaged in an aggressive campaign to increase their market share by massively subsidizing ride prices, so much so that neither company has turned a profit.

The tactic proved successful for Didi which eventually outpaced Uber to win the market through the acquisition. The resulting company’s high valuation and low revenue pose a complex question for regulators.

It’s not the first time the ride-hailing model has attracted regulatory attention in China. Until July, ride hailing was not officially legal in the country, creating uncertainty for companies like Uber and Didi who were attracting billions from investors, including state-backed institutions.

The latest antitrust review could potentially set a precedent for assessing companies in the fast-growing on-demand sector in China, including AirBNB-style startups and food delivery startups (of which there are many).

While the Didi-Uber deal is still expected to go through, the structure of the resulting company will be scrutinized by China’s Ministry Commerce. The ministry’s antitrust unit has already held two meetings with Didi officials, according to a ministry spokesperson.

When Uber and Didi Chuxing orchestrated their market-shifting alliance last month, it put Lyft in a very tough position.

The U.S.-based ride-hailing service that aligned themselves strongly with Didi both financially and strategically, now has to come to terms with the fact that their largest ally is now in cohorts with their largest competitor, Uber.

It’s a trying time for the U.S.’s second-biggest ride-hailing company, and Lyft is now trying to do what one might expect: shop around for a buyer.

According to sources who spoke to the New York Times, Lyft has approached Didi Chuxing in hopes of selling the company, as well as high-profile Didi investor Apple. The company has also been in discussions with General Motors, Google, Amazon and even Uber itself, the same people said.

The acquisition of Uber’s China operations by Didi Chuxing effectively flipped the ride-hailing market upside down overnight. Before, the competitive pressure point lay between Uber and Didi, along with their network of loosely affiliated strategic partners, including Lyft, India’s Ola Cabs and Singapore’s Grab.

In the wake of Uber and Didi’s armistice, the weight of competition has shifted to the market between Uber’s global operations and the number of independent hailing services that now find themselves on the periphery of the empire, including Lyft.

It’s still not clear what the future of Lyft and Didi’s relationship will look like. With Uber and Didi retaining separate apps in the China market for now, Lyft still acts as Didi’s trans-pacific partner, with Didi users able to hail Lyft cars in the U.S. through the Chinese app and vice versa.

Prospects for the U.S. company are tightening. Lyft has neither the stashed funds or investor prospects to even consider taking on the Uber-Didi alliance, meaning their easiest bet is to broker a sale with one of their own strategic investors, which includes G.M. and Didi.

Lyft is reportedly working with Silicon Valley-based banking firm Qatalyst Partners to manage the sale, and as of January is valued at $5.5 billion USD.

Josh Horwitz from Quartz joined us to discuss the Uber and Didi deal in China and analyzed the fallout that will impact the anti-Uber alliance. We discussed possible reasons why Uber decided to sell their China business and operations to Didi and made the deal to let each other invest in one another. We also talk about investor intervention, the battle over the Asia market from India to Southeast Asia, and self-driving cars. Last but not least, we looked at the future of on-demand ride-hailing apps in the next 1 to 2 years.

Download MP3 here (27.7 MB) or Subscribe via RSS

Analyse Asia with Bernard Leong is a weekly podcast dedicated to the pulse of technology, business & media in Asia. They interview thought leaders and leading industry players and gain their insights to how we perceive and understand the market. Analyse Asia is a content partner of TechNode.

Notes:

Here are the interesting show notes and links to the discussion (with time-stamps included):

• Josh Horwitz, Writer from Quartz
• Why Didi buy Uber China [1:30]
  • What are the actual terms of the deal? [1:41]
  • In Josh’s opinion, what actually happened? [2:55]
  • Will Uber China’s app merge with Didi’s? [5:50]
  • Why did Uber sell Uber China to Didi? [6:18]
    • Is it because of them are bleeding cash, investor intervention as Uber and Didi share 3 common investors (Tiger, BlackRock, HillHouse), and/or the drying up of money and investors? [6:45]
    • Is it because Uber really wants to go to other markets which are more open, for example Southeast Asia and India? [7:40]
    • Is it because Uber is fighting a losing war on regulation and local conditions in China? [8:47]
    • Is it because Uber is conserving cash to focus on the next phase of self-driving cars? [12:15]
  • With Uber’s China exit, reminiscent of Google and ebay and even Apple, does it further prove that Western companies have no chance in China? [13:51]
  • In Deal With Didi, Uber Frees Itself to Expand in Other Markets, what happened to the Anti-Uber Alliance, given Uber owns Didi in a way, and it’s now all a family but with fiefdoms across the regions? [21:12]
• The impact to Grab [22:49]
  • Immediately, after the event, the Grab CEO issued a call to arms on Uber in Southeast Asia. In your opinion, what are the reasons behind that? Is it just a savvy PR move? [23:00]
  • Then we get leaks of a potential US$1B round for Grab from SoftBank and Didi – will Uber lose again? [23:30]
  • What are Grab’s chances against Uber? [25:03]
• How about Ola?
  • What are Ola’s chances against Uber? [26:20]
  • How is Uber plan to avoid getting Didi-ed in India?
• What will be the future of on-demand transportation in the next 1 to 2 years? [27:12]

Didi Chuxing, the leading ride-hailing service in China, has reached a deal to acquire Uber’s China operations in a merger that could be worth up to $35 billion USD.

Didi will take over Uber’s China business, while the U.S. company will become Didi’s largest shareholder. The news comes days after Chinese regulators announced the upcoming legalization of ride-hailing services in the country.

According to sources who spoke to Bloomberg, investors in Uber China, which includes search giant Baidu, will take a 20 percent stake in the newly merged entity, and Didi will make a $1 billion USD investment in Uber Global at a $68 billion USD  valuation to kick off the partnership. Uber will maintain management of their app in China for the time being.

[Update: Didi confirmed the acquisition in a statement, noting that Uber Global will take a 5.89 percent stake in the newly merged entity with a preferred equity interest worth 17.7 percent economic interest in Didi. Chinese shareholders, including Baidu, will receive a 2.3 percent stake in Didi.

Uber founder Travis Kalanick will join the board of Didi while Didi founder Cheng Wei will join the board of Uber.]

The deal marks the end of a grueling rivalry between the two services, which saw both companies shell out billions in marketing and subsidies. Uber also set a new benchmark for U.S. tech companies with their China entry, opening an entity financially distinct from their parent company, Uber Global.

The landmark consolidation brings together a host of the country’s top investors, with Baidu now joining Alibaba and Tencent, who oversaw investments in Kuaidi Dache and Didi Dache respectively before the two ride services merged in early 2015.

State-backed Chinese insurance giant China Life had already invested in both companies, investing $200 million in Uber in 2015 before injecting $600 million in Didi last month, raising suspicion that the ride sharing companies were in merger discussions.

According to an internal blog post by Uber CEO Travis Kalanick on the subject of the deal, “Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business.”

For those living in China, using ride-hailing apps Didi Chuxing and Uber has become a part of daily life. Which is why it might surprise some to hear they were illegal until a few days ago.

The services finally left the legal grey zone on Thursday, when a group of regulators announced new laws which will make ride-hailing legal under as of November 1st.

Until now, the services could’ve been shut down without notice, despite a fielding billions of dollars in investment, some from the Chinese government’s sovereign investment fund itself. While a blanket ban would’ve been unlikely, the government did use the legal distinction to periodically arrest drivers and stop the companies speaking at industry events.

The legalization comes with some draw backs for the companies. When the law comes into effect later this year drivers will have to have a recent car, three years’ driving experience, no criminal record and a license from a local taxi-regulator. It’s a comparatively soft set of regulations compared to earlier proposals, but it still raises the entry barrier for new drivers.

Both Uber and Didi Chuxing have poured billions into their China expansion efforts. Didi Chuxing sealed a $1 billion USD investment from U.S. tech giant Apple in May, following several large rounds from state and private investors. Uber’s China operation has committed over $1 billion USD a year to the market, engaging in an aggressive subsidies war with Didi.

Baidu-backed ride-hailing service Yidao has lashed out at Tencent’s messaging service WeChat for blocking the ride service on their platform.

Founder of Yidao, Hang Zhou, penned an open letter to Tencent CEO Pony Ma on his public Weibo account this week accusing the social media platform of periodically blocking users from accessing the Yidao site through the social platform for competitive reasons.

Yidao competes directly with Tencent-backed Didi Chuxing, the country’s most popular ride-hailing service.

Users were unable to access the Yidao app from WeChat from July 13th. Following Mr. Zhou’s open letter, the ban was briefly lifted before being reinforced on July 14th. The ban appears to have been lifted again at the time of writing.

“I just do not understand why WeChat blocked the application,” he said, “Moreover, Uber and Shenzhou [UCAR] type apps have also been blocked, Didi is the only exception.”

Yidao recently introduced a feature that allows users to compare the cost of an Yidao ride with other rides.

Tencent released a public statement within hours of Mr. Zhou’s open letter saying that Yidao had been blocked by the site for asking users to share promotional material in return for cash rewards.

The scuffle highlights the fierce competition between China’s current top ride-hailing apps, which have been fighting a two-year long war of attrition fueled by subsidies and aggressive marketing campaigns.

In December WeChat blocked Uber on the platform, citing ‘malicious’ marketing tactics. The social platform has a range of rules that apply to businesses who wish to use the platform to market brands. Companies must have over 100,000 followers before they are able to advertise, and must also submit a relevant license.

WeChat claims Uber failed to submit the license, Uber fired back saying that they had the appropriate regulatory approvals but had never been asked to submit them. Baidu is a prominent investor in both Uber and Yidao.

Being blocked on WeChat is a serious blow for any company in China. The app, which boasts over 750 million total users with over 90% coverage in tier-one cities, has become a major marketing and communication tool for companies in China. The app not only supports public accounts, but a highly popular payment service, WeChat Pay.

When hailing a ride, Uber users in China keep the app open for an average of 90 seconds once they get in the car, according to the company.

A minute and a half doesn’t seem like much, but in the word of mobile content it’s very valuable. Which is why Uber is hoping to make serious bank on that minute and a half.

In May, the company first announced their UberLIFE initiative for China, which involves a curated mesh of content including recommended cultural, sporting and dining options based on collected travel data.

Uber China VP and General Manager of Central China reiterated that commitment at TechCrunch Shanghai on Monday, which was co-hosted by Technode, saying that the company wants to be a service “understand the lives” of their users, not just their riding habits.

It’s just one of the latest initiatives the company is trialling as part of an aggressive attempt to maintain customers while attempting to lower subsidies. However while the company has launched several new ride-related services in China, UberLIFE represents their first foray into a much more risky area: content. As U.S. tech companies Apple, Google and Linkedin know all too well, even the most innocent content curation can attract the ire of the Chinese government.

Uber is backed by Baidu in China, the country’s leading search engine, but even they have come under fire from the government recently over content issues. Regulators recently released a ruling requiring Baidu to clearly identify ads on their platforms.

For now, Uber’s goal is to just keep users in their app during that first 90 seconds, and possibly longer. The company implied the recommendations within the app would be driven by data collected on where consumers were going when using the app, though the potential for advertising is very obvious.

It’s worth noting that in taxi services in Beijing, riders can read a similar, physical lifestyle and events magazine that is often offered in the backseat pocket of taxis. Popular examples include 慢步, which is like a localized in-flight magazine for Beijing, so UberLIFE could be picking up on an existing behavior in some cities.

Following a series of high-profile investments, Didi Chuxing, the company behind China’s top ride-hailing app, has announced the closure of their $7.3 billion USD round.

Earlier this week Didi announced a $600 million USD investment from state-backed insurance company China Life, which followed a $1 billion USD investment from Apple in May. We now have a more comprehensive overview of investors in the round, with some of the top names listed below:

• Apple
• China Life
• Ant Financial
• Tencent
• Alibaba
• China Merchant’s Bank
• Softbank

With the exception of Apple and China Life, which is also an Uber-backer, the final list of high-profile investors doesn’t reveal any surprises as they are previous investors. Alibaba and Tencent were investors in Kuaidi and Didi respectively before they merged to make Didi Chuxing. Interestingly, this is the first investment in the ride-hailing firm by Alibaba’s finance arm Ant Financial.

The $7.3 billion USD injection is made up of $4.5 billion USD equity investment, with the remaining $2.8 billion made up of strategic financial arrangements from the round’s two significant state-backed investors. China Life committed to a long-term debt investment of 2 billion yuan (about $300 million USD), while China Merchant’s Bank agreed to become the lead arranger for a syndicated loan worth $2.5 billion USD.

The round values Didi at approximately 25 billion USD, and the company claims to have $10.5 billion USD in disposable funds now in their arsenal. This is a significant tool for the company which continues to run an extensive subsidies program in their battle against Uber in China.

Didi founder Cheng Wei said in a statement this morning that he was “inspired” by the support form the new investors. The company says they will use the proceeds of the round to upgrade their big data operations, improving user experience and exploring new business lines.

Chinese insurance giant China Life Investment Holding Co. has officially joined the ranks of investors behind the country’s largest ride-hailing app and Uber’s biggest global competitor, Didi Chuxing.

The Chinese startup confirmed on Monday that they have received a $600 million USD strategic investment from the life insurer, which includes a $300 million USD equity investment and a further $305 million USD long-term debt investment.

The latest investment also brings to light an interesting twist: China Life has previously invested in Uber. In April 2015 we reported that China Life had invested about $200 million USD  in the U.S. ride-hailing app.

The competition between Uber and Didi Chuxing has reached a feverish pitch on the mainland as both companies have publicly disputed each other’s market share data, as well throwing barbs over the ongoing subsidies war driving their local expansion.

It’s not the first time a investor has backed the China-ride-hailing-horse both ways. China-based investment firms Hillhouse Capital and Tiger Global Management have both invested capital in the two competing ride-hailing companies, though the scale of China Life’s dual commitment is unprecedented.

China Life’s investment is part of the same round that Apple participated in when they recently committing $1 billion USD to the ride-hailing app. The closure of the current round would value Didi Chuxing at over $25 billion USD.

China Life is now joins a list of common investors that reads like a who’s who of influential China tech investors. Didi has attracted significant investments from the country’s biggest tech firms, including Alibaba and Tencent, as well as the venture capital arm of fellow insurer Ping An.

China Life also adds to the number of state-backed investors who now have a stake in the ride-hailing company. Chinese sovereign wealth fund China Investment Corporation invested in Didi as part of a $2 billion USD round in August 2015. State-owned China Merchant’s Bank is also a backer of Didi.

Baidu has led a $300 million USD investment in one of China’s biggest auto trading and marketing platforms, BitAuto, revealed the search giant on Monday. It’s the latest company to join Baidu’s growing auto investment portfolio.

Baidu is joined by several previous investors in BitAuto, including internet services giant Tencent and e-commerce company JD.com. The three companies each purchased $50 million USD worth of newly issued shares from BitAuto at $20.23 each. BitAuto listed on the NYSE in November 2010.

The new round of funding comes as China’s burgeoning tech autos market undergoes a fresh round of new strategic partnerships between ride-hailing services, online service platforms, and autonomous and electric car projects.

Baidu, which is also a strategic investor in Uber, has been building up their deep learning and AI capabilities to support their autonomous vehicle project, tipped to be revealed in 2018. Tencent is a major investor in Uber’s top China rival, Didi Chuxing, which recently secured a $1 billion USD investment from Apple as part of a larger strategic fundraising effort.

Bitauto is also an investor in ride-hailing services. The company lead a $20 million USD B series in Didi chuxing competitor Dida Pinche, which in May 2015 raised a further $100 million USD from China Renaissance Capital Investment, TBP Capital and IDG Capital Partners among others.

Bitauto CFO Andy Zhang reportedly met with Uber CEO Travis Kalanick in March last year to discuss a possible partnership between Dida Pinche and Uber. While there has been no evidence that the two have since worked together, the Baidu’s strategic investment now puts them in the same investment family.