Didi Announces Deal With Ride-Hailing Company in Brazil
(Beijing) — Chinese ride-hailing titan Didi Chuxing said it's joining forces with Uber’s chief rival in Brazil as part of an ongoing search for business abroad in the face of regulatory hurdles at home.
The company announced Wednesday it will invest an undisclosed amount in Brazilian ride-hailing company 99, whose app gives riders access to an army of 140,000 drivers in Rio de Janeiro, Sao Paulo and other major cities. Didi's stake in 99 was not announced.
The Chinese company, which has dominated the China market since buying Uber Technologies Inc.’s Chinese unit in August in a deal worth $35 billion, has pledged technology and funding to support 99’s plan to expand across Brazil and into other Latin American countries.
“We welcome Didi to Latin America,” said 99 CEO Peter Fernandez in a statement.
Didi has been forming alliances with Uber competitors in key markets since 2015, when the company invested in Grab Taxi in Southeast Asia, India's Ola, and Lyft, the second-largest ride-hailing company after Uber in the United States.
Overseas expansion is playing a key role in Didi's business strategy amid questions about its ability to continue to dominate the Chinese market.
Since the Uber buyout, Didi has controlled about 80% of the Chinese market. But the takeover has yet to be finalized, as it's still waiting for final approval from antitrust regulators at the Ministry of Commerce.
In addition, Chinese government regulators in recent months have tightened rules for ride-hailing vehicles and drivers that could threaten the company's bottom line.
Privately held Didi, whose biggest investors include Tencent Holdings Ltd. and Alibaba Group Holding Ltd., does not issue financial reports.
After the Apple contractor Foxconn bought a 0.355% stake in Didi for $120 million in September, analysts pegged the ride-hailing company's value at $34 billion.
Industry watchers such as iiMedia CEO Zhang Yi said Didi is expanding beyond major Chinese cities to keep investors happy.
“Didi must shift to other businesses, such as car rental and bus (services); expand to third- and fourth-tier cities (in China) that are more tolerant toward ride-sharing; and overseas markets,” Zhang said. “It needs to tell a more convincing story to investors if it wants to keep its valuation from slipping.”
For years, Didi waged an expensive war for Chinese market share by subsidizing its drivers before Uber — which also subsidized its drivers in China — eventually threw in the towel.
The deal for 99 was Didi’s first investment in an overseas Uber rival since winning the war.
Contact reporter April Ma (email@example.com)
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