Didi Chuxing Wants to Be a Global Company -- and Its Partnerships Could Be the Key to Making That Happen

By Markets Fool.com


Image source: Getty Images.

Continue Reading Below

This year has been pretty monumental for Didi Chuxing. The China-based ride-hailing company has expanded its services to 400 cities across China, secured $1 billion in funding from Apple, saw its valuation rise to $35 billion, and bought up rival Uber's business in China.

But 2016 isn't over yet, and Didi has more to accomplish. The company's president, Jean Liu, has twice announced this month that the company is planning to venture out of China and into the global market.

At Vanity Fair's New Establishment Summit earlier this month, Liu said the company is "definitely going global," and then at The Wall Street Journal's WSJD Live technology conference later in the month, Liu again said, "We intend to go global. We aspire to be a global company."

That sounds all well and good, but what does it actually mean for Didi? Liu gave some sparse details at the Vanity Fair conference:

We're a big sponsor and big believer in local players. If there are no existing local players, we'll go there by ourselves. We will play a global game.

Continue Reading Below

Essentially, Didi is looking to bring its own form of ride-sharing to other (unspecified) countries, or partner with local companies that already exist in certain markets.

Many companies, both large and small, aspire to reach beyond their own country's borders, but there are few things Didi's doing that could make its current ambitions a future reality.

Why Didi could succeed outside of China

There's no sure path for Didi's global success, of course, but there are a few good indicators. First, the company is already in partnerships with a few ride-sharing players around the world.

Didi is a key investor in the Southeast Asian ride-hailing company Grab, and was part of a $350 million round of funding last year. Investing in Grab gives Didi access to Thailand, the Philippines, Indonesia, Vietnam, Singapore, and Malaysia. There have been rumors that Didi might just end up buying Grab outright, which would instantly propel Didi into the world market. But even if it doesn't go that route, Didi should still be able to glean some of the inner workings of ride-hailing services in Southeast Asia from the relationship.

Then there's the company's relationship with Ola in India. The company raised $500 million in late 2015 from a handful of investors, one of which being Didi. Uber's new 17% stake in Didi makes the latter's Ola investment a bit of an awkward relationship, considering Uber and Ola are huge rivals in India. Nevertheless, Didi's investment in Ola gives the company a stake in Ola's business, which is already in more than 100 cities across India.

And finally there's Didi's relationship with Lyft. Didi invested $100 million in the company just last year, and also partners with Lyft to let its customers use the Didi app to hail a Lyft in the U.S., and let Lyft customers hail Didi cars when in China.

Lyft's future with Didi has been a bit up in the air since Didi's purchase of Uber's China business. But at the WSJD conference this month Liu said that there's a "very good chance" it would partner with Lyft for its global ambitions. How, exactly, it'll do that still remains unclear.

With Didi's strong partnerships and investments in key ride-sharing companies around the world, it's not hard to imagine the company expanding into those markets by either purchasing a company outright, or -- if it wanted even more complicated relationships than it has now -- entering a market itself where one of its partners already exists.

While Didi isn't shedding lots of light on its global plans right now, it's still very clear that its presence in other countries, through its investments, is growing and it could easily parlay that into new opportunities.

Didi already serves up 20 million rides every single day in 400 cities throughout China. The company says it processes 70 terabytes of data every day, and can predict up to 15 minutes ahead of time where it'll need its drivers to be, with 90% accuracy.That's no easy feat, and it's an impressive use of data that likely can be applied in other markets. If it chooses to do so, we may just see Didi Chuxing dominate other countries in the same way it took down Uber in China.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple and has the following options on the stock: long January 2018 $90 calls and short January 2018 $95 calls. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.