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China’s Didi Chuxing has emerged as the most endurable rival to Uber anywhere in the world. When Didi first started, inspired by the UK’s Hailo, it was beset by immense competition within the country, most notably from Alibaba backed Kuaidi Dache. Didi then went to Tencent for help in funding which it duly got, to fight Kuaidi on all fronts. Their rivalry was strongest on the smart phones but a deluge of a snowstorm in 2012 initiated a great surge in online booking of cabs. Then in 2014, during the Chinese New Year, Tencent’s We Chat service showed an immense rise in gifting using the mobile phones. This made all realize the mobile phones would prove to be the greatest differentiator thus a strong business analytics  wing was needed and brought in place. Eventually these two held majority of the ride-hailing market in China, but global giant Uber was set to enter. This forced the two to reach a compromise with Didi owning three-fifths of the new entity. Uber hardly faced any competition in the rest of the world, and did not presume Didi Chuxing to endure for so long. The latter even took the fight to Uber’s home turf by investing in their rival Lyft. Uber however had almost a limitless capacity for fund generation and a fresh round of investment from a fund in Saudi Arabia totally changed the tables. Even Chinese state backed companies were investing in Uber or other Chinese ride-sharing enterprises. Didi now relented to invite Uber over for peace talks. Uber now owns a certain percentage of Didi Chuxing and both these companies have non-voting members on each other’s boards. This compromise proved to be a practical decision.

Source:https://www.bloomberg.com/features/2016-didi-cheng-wei/

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