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A user opens the Didi Chuxing smartphone app in Shanghai, China, on September 18, 2020.
Kelay Shane | Bloomberg | Getty Images
BEIJING – China’s version of Uber, Didi Chuxing, is trying to use car travel as a means in multiple aspects of daily life from grocery shopping to finance.
Didi on Thursday filed for a listing in New York in what many expect could be the world’s largest initial public offering this year. Founded in 2012, the company ranks among the top five privately owned startups in the world and counts SoftBank, Uber, and Tencent as major investors.
China’s smartphone welcome service remains Didi’s core business, generating $20.4 billion in revenue last year amid a total net loss of $1.62 billion, according to its preliminary prospectus. But with Didi turning a profit in the first quarter of this year, the “other initiatives” revenue share rose to 5%, from 4% for all of 2020. This is up from 1.2% in 2018.
A quick look at Didi’s smartphone app reveals a plethora of other products related to bike sharing, motors, personal finance and gas stations. The set of codes is similar to that of Alibaba’s Alipay, whose app is not just a mobile payment platform but a system that allows users to book airline tickets and pay utility fees. Likewise, the Grab app, which is prevalent in Southeast Asia, serves food and wants to become a regional leader in mobile payments.
Eight types of car services
Didi is the primary ride-hailing app in China, even with many other players entering, including players who focus on high-quality vehicles (Shouqi) or new energy vehicles (Cao Cao).
Users can choose from eight options in Didi, ranging from car sharing to luxury car service. Didi also allows users to call taxis through its app, and runs a business with a chauffeur that assigns drivers to car owners who may have a lot of alcohol or can’t drive their own cars for other reasons. 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 ending March 31. Didi said it made 133.64 billion yuan ($20.88 billion) in the “China mobility” category last year.
Including Didi’s other services such as e-bikes and shipping, customer costs for different types of products can range from 15 cents to more than $100, the bulletin said.
Building a financial arm
Didi said in the prospectus that bike and e-bike sharing contributed the most last year to its total revenue of 5.76 billion yuan from “other initiatives”. Other businesses in this category include urban freight, car rental, community group buying, and financial services.
The company said in August that its fintech arm Didi Finance — which was not mentioned in the prospectus — announced a partnership with Shanghai Bank for Consumer Financial Services and other digital financial products.
Didi has also partnered with China Merchants Bank to support credit card applications with a ride-hailing app and offer installment purchase plans for cars. A subsidiary of Didi works with Ping An Insurance to sell related financing and lease products, as well as insurance.
The startup is renting vehicles to drivers at prices it claims are about 20% lower than outside the Didi platform. The prospectus said that while more than 600,000 vehicles are available for leasing, about half are owned by about 3,000 car rental partners, reducing the amount of assets for which Didi is responsible.
Anecdotally, Didi was recently promoting its mobile payment system to some users in Beijing by setting it as the default payment option – with a discount. Users had to manually select other options such as WeChat pay, after which the discount was removed.
Didi’s ride-hailing app also works with international credit cards. The company operates in 15 countries, including Brazil, Mexico and Japan.
Electric bets
Many analysts expect that self-driving shared vehicles will become a major mode of transportation in the future, rather than sole ownership of the vehicle.
Didi has invested in its own autonomous driving unit, which launched a “robotaxis” in part of Shanghai in June 2020. The passenger transport company announced in November that it had co-developed an electric vehicle with BYD called the D1, which will be rolled out in China’s major city in subsequent months. .
In May, the Autonomous Driving Unit and state-backed GAC Aion New Energy Automobile agreed to work towards mass production of fully autonomous new energy vehicles.
Didi claims to have the largest electric vehicle charging network in China, based on self-commissioned research.
Data privacy and other risks
Didi’s planned initial public offering in New York comes with rising tensions between the United States and China over the past few years. The relay service giant spent nearly three pages of its prospectus discussing the risks of delisting from not being able to comply with US government audit requirements.
The Chinese government’s increased scrutiny of technology companies for monopolistic practices and public regulatory scrutiny over data privacy also poses risks to Didi in its prospectus.
In 2018, Didi came under fire from Chinese social media users – who demanded that the app be taken down – after a driver raped and killed a woman. As a result, Didi announced that she would record audio during car trips, which would be deleted after seven days.
Didi did not specifically mention this feature in the prospectus.
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