Caixin
BUSINESS & TECH

Didi Restructures With Car-Hailing Under Pressure

By Liu Xiaojing and Denise Jia

(Beijing) – Didi Chuxing, China’s dominant online car-hailing service, restructured its business operations and management Thursday in a move to adapt as strict local regulations alter the market environment in China.

Four months after authorities tightened rules on car-hailing, Didi’s Chief Executive Officer Cheng Wei and President Liu Qing told employees in an internal memo that the company is reorganizing into four business units. They are ride-sharing and taxi services, high-end car-booking and chauffeur services, public transportation services and overseas business operations.

The public transportation and overseas business divisions are new. According to the memo, the public transportation unit will work with local governments to build smart transportation systems using big data technologies provided by Didi. The company has set up partnerships with local government-backed bus operators in Tianjin, Shenzhen and other cities.

The overseas division is part of a stepped-up effort to expand abroad. In January, Didi reported an investment in Brazil’s largest local car-hailing app provider 99taxi. While Didi didn’t disclose the size of the investment, a local newspaper said it was valued at more than $100 million.

Didi, which controls about 80% of China’s car-hailing market after last year’s buyout of Uber’s China unit, faces mounting pressure from Chinese regulators. Several local authorities in recent months have tightened rules for ride-hailing vehicles and drivers that threaten Didi’s business.

Beijing and Shanghai in December issued regulations requiring all drivers for car-hailing companies to be permanent city residents and their cars to be registered locally. The rules effectively made the majority of Didi’s current drivers and vehicles ineligible.

Didi’s car-hailing business has retracted in recent months as it cut subsidies to drivers and removed ineligible drivers. The company has yet to make its online car-booking services fully compliant with the new rules.

Didi said its nationwide platform received near 20 million orders daily as of the end of 2016.

Contact reporter Han Wei (weihan@caixin.com)

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