A user opens the Didi Chuxing ride-hailing smartphone app in Shanghai, China, on September 18, 2020.
Qilai Shen | Bloomberg | Getty Images
BEIJING — The Chinese version of Uber, Didi Chuxing, is trying to use car travel as a way to integrate multiple aspects of everyday life, from grocery shopping to finances.
Didi filed Thursday to list in New York in what many believe could be the largest IPO in the world this year. Founded in 2012, the company is one of the five largest privately held start-ups in the world and counts SoftBank, Uber and Tencent as major investors.
Smartphone-based taxi services in China remain Didi’s primary business, generating $20.4 billion in revenue last year, while total net losses were $1.62 billion, according to the prospectus. But when Didi turned a profit in the first quarter of this year, the revenue share of “other initiatives” rose to 5%, from 4% for the whole of 2020. That’s an increase of 1.2% in 2018.
A quick look at Didi’s smartphone app reveals a slew of other products related to bike sharing, movers, personal finance and gas stations. The set of icons resembles that of Alibaba affiliate Alipay, whose app is not only a mobile payment platform, but also one that allows users to book airline tickets and pay for utilities. Likewise, Grab, Southeast Asia’s predominant ride-hailing app, delivers food and aims to become a regional leader in mobile payments.
Eight types of car services
Didi is the primary app for rides in China, even with the arrival of several other players, including those targeting the high-end (Shouqi) or new energy vehicles (Cao Cao).
Users can choose from eight options on Didi, ranging from carpooling to luxury car service. Didi also allows users to hail taxis through his app and runs a driver company that assigns drivers to car owners who may have drunk too much alcohol or are otherwise unable to drive their own vehicle. These temporary drivers can travel between assignments on folding bikes.
The company said it had 377 million annual active users and 13 million annual active drivers in China for the 12 months ended March 31. Didi said it earned 133.64 billion yuan ($20.88 billion) in the “mobility in China” category last year.
Including Didi’s other services, such as e-bikes and freight, customer costs for various types of products can range from 15 cents to more than $100, the prospectus said.
Building a financial arm
Didi said in his prospectus that bicycle and e-bike sharing contributed the most to the total revenue of 5.76 billion yuan from “other initiatives” last year. Other companies in the category include intra-city freight forwarding, car leasing, group purchasing and financial services.
The company said in August that its financial technology arm Didi Finance – which was not mentioned in the prospectus – announced a partnership with the Bank of Shanghai for consumer financial services and other digital financial products.
Didi has also partnered with China Merchants Bank to support credit card applications through the ride-hailing app and offer installment purchase plans for cars. A subsidiary of Didi partners with Ping An Insurance for the sale of financing and lease related products and insurance.
The start-up leases vehicles to drivers at prices it believes are about 20% lower than outside Didi’s platform. While there are more than 600,000 vehicles available for lease, about half of these are owned by about 3,000 car leasing partners, reducing the number of assets for which Didi is responsible, the prospectus said.
Anecdotally, Didi recently promoted his own mobile payment system to some users in Beijing by setting it as the default payment option – at a discount. Users had to manually select other options like pay WeChat, after which the discount was removed.
Didi’s ride-hailing app also works with international credit cards. The company is active in 15 countries, including Brazil, Mexico and Japan.
Bet on Electric
Many analysts expect self-driving, shared vehicles to become a major mode of transportation in the future, rather than individual car ownership.
Didi has invested in its own autonomous driving unit, which launched ‘robotaxis’ in a part of Shanghai in June 2020. Chinese cities in subsequent months.
In May, the autonomous driving unit and the state-backed GAC Aion New Energy Automobile agreed to work on mass production of fully self-driving new energy cars.
Didi claims it has the largest electric vehicle charging network in China, based on its own commissioned research.
Data privacy and other risks
Didi’s planned IPO in New York comes as tensions between the US and China have increased in recent years. The ride hailing giant spent nearly three pages of its prospectus discussing the risks of delisting from failing to meet US government audit requirements.
The Chinese government’s increased scrutiny of technology companies over monopolistic practices and the general regulatory scrutiny of data privacy are also risks that Didi mentioned in his prospectus.
In 2018, Didi came under fire from Chinese social media users – who called for the app’s removal – after a woman was allegedly raped and murdered by a driver. As a result, Didi announced that it would record audio during car journeys, which would be removed after seven days.
Didi did not specifically mention this feature in its prospectus.