Despite Apple pouring $1 billion into Chinese domestic ride-share leader Didi Chuxing, Uber promises to topple China’s most popular ride-share service within a year.
Zhen (“Jean”) Liu, SVP of Strategy at Uber China, claimed at the Hon Kong’s Converge tech conference, that her firm would pass Didi in market share within the next twelve months.
Shortly after Uber entered the market in late 2014, Didi was formed by merging China’s top two domestic e-hailing for taxis and private cars firms to join forces in combatting the voracious foreigner. Funded with investments from Alibaba and Tencent, two of China’s biggest companies, Didi has been the dominant ride-sharing app in China’s 400 largest cities.
The Chinese government tried to favor Didi by decreeing that companies could only use government-licensed taxis. Communist regulatory officials ruled that all other e-hailing applications were illegal if their technology threatened to harm licensed taxi companies.
Didi also joined a global alliance of ride-hailing companies that includes Lyft in the United States and Ola in India. The tech coalition allows the three partners to use their own language apps in China, the United States, and India.
But Uber in the last 2 years has spent billions trying to crush Didi, according to Liu. To continue funding its effort, ‘Uber China’ raised $1.2 billion by selling stock at a $7 billion valuation to a group of investors that include Baidu and Uber, Inc. early this year.
Liu added, that a piece of the $3.5 billion investment Uber, Inc. raised from Saudi Arabia’s Public Investment Fund (PIF) on June 1, will be reinvested in Uber China.
With Didi rapidly losing market share to Uber, the Re/Code tech blog commented that Apple’s late May investment of $1 billion into Didi is an effort to mend fences with the Chinese leadership, that has been using its regulatory and legal clout to favor domestic smartphone makers, such as Huawei and Xiaomi.
The Didi investment provided Apple with an entry into the “long-term strategic alliance” between Lyft and General Motors to create “an integrated network of on-demand autonomous vehicles” that would operate like driverless taxis. Apple has operated in China since 2009 and its mapping expertise is considered the best in the nation.
Uber’s Liu didn’t seem very worried about Didi’s alliances. She commented, “Last year, we were only operating in eight cities and we were [at] about one percent market share. A year later, we are about one-third of the market share and operating in over sixty cities across China.”
To emphasize how important the China market has already become to Uber, Liu said that six of Uber’s top ten busiest cities worldwide are now located in China. She expects that China will account for even more of its top ten locations in the future.