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Didi deal turns tables on anti-Uber alliance

  • Author:naky
  • Source:www.diecastingpartsupplier.com
  • Release on:2016-08-05
When Jean Liu, president of China’s car-hailing behemoth Didi Chuxing, took the stage at a press conference in New York last autumn, she waxed lyrical about Lyft, Uber’s US rival.Ms Liu fondly recalled a recent stint at Lyft headquarters — a colleague’s golden retriever was affectionately remembered and she recounted a Lyft journey with a retired chef.

That day, she announced Didi had invested $100m in Lyft, calling it a “pioneer” and an “innovator”, and laid out plans to link the Didi and Lyft apps for Chinese visitors to the US.Didi subsequently became one of the biggest cheerleaders for Lyft, which is a solid number two in the US car-hailing market behind Uber, but Didi’s deal this week to merge with Uber China now throws this partnership into doubt.

With the transaction, Didi is effectively switching sides in a ride-hailing war that stretches across the globe and encompasses a complex web of partnerships, investments and shared investors.Before the deal, Didi had been the linchpin in a nascent global anti-Uber coalition, consisting of companies in which Didi had invested: Lyft in the US, Ola in India and Grab in Southeast Asia.

Didi will also invest $1bn for a minority stake in Uber and both companies will get non-voting seats on each other’s boards.While this deal is solely focused on China, it will have knock-on effects around the world, particularly on Didi’s earlier allies, who compete fiercely with Uber in their home markets.

In Southeast Asia, the chief executive of Grab, a taxi-booking app, decided to address the situation even before Uber’s deal with Didi had been formally announced.“With the deal in China, we expect Uber to turn more attention and divert more resources to our region,” wrote Anthony Tan, founder and chief executive of Grab, in an email to employees on Monday morning.

With Uber China no longer acting as a drain on Uber’s resources — the company had been losing more than $1bn a year there — it will have more financial firepower for other battles.India, Southeast Asia, Latin America and the US could all see an influx of investment as a result, heightening the competitive threat to companies such as Grab, Ola and Lyft.

Their engineering teams were also working together as part of an ambitious project to link their apps so that passengers could seamlessly access each other’s car networks while travelling.Now those plans could be in danger, even though Didi remains an investor in all three companies. At Lyft, which had previously counted Didi as one of its most vocal cheerleaders, a spokeswoman said: “Over the next few weeks, we will evaluate our partnership with Didi.”

One possibility could be for Didi to set up partnerships with Uber where its current allies do not operate, such as in Europe or Latin America.Meanwhile, Grab’s Mr Tan sees Uber’s decision to leave China as a hopeful sign for its rivals — proof that homegrown transportation companies can beat the Silicon Valley tech giant.

“We have seen that when the local champion stays true to their beliefs and strengths, they can prevail,” he wrote. “We see this happening in China, and it will be the same here. They’ve lost once, and we will make them lose again.”As for Ms Liu, her latest statement suggests the new relationship with Uber will be more enduring than Didi’s earlier dalliances. “We raged an earth-shaking war,” she wrote in an internal email announcing the deal. “And when we join hands, our love will last till the end of time.”