Rivals rush to profit from security crackdown on China’s Didi

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Rival apps from Didi Chuxing are rushing to lure drivers and users as they seek to capitalize on a cybersecurity crackdown on China’s rideshare market leader following its successful New York listing.

Didi accounts for 90% of all car bookings in China, but the country’s roughly 230 ridesharing apps are trying to cut its lead, speeding up expansion plans, offering discounts and increasing incentives for drivers, analysts say.

Many of Didi’s competitors are also backed by major Chinese automakers. Cao Cao, a Geely rideshare app that uses electric cars, recently slashed the prices of digital coupons that provide users with various discounts and perks of nearly a third.

T3 Chuxing, an online taxi booking service based in Nanjing and launched by three of China’s largest automakers, including the FAW Group, has announced plans to expand to 15 cities, according to an internal memo cited by the media. Chinese. The company did not respond to a request for comment.

Didi is also facing an assault from Meituan, the main food delivery hub in China. The group relaunched its carpooling platform last week, which it abandoned in 2019, and offered drivers to join Rmb 100 ($ 15.50).

The Cyberspace Administration of China investigation was announced two days after Didi’s initial public offering of $ 4.4 billion in July, the largest in the United States this year. The investigation, which could last up to 10 weeks, came after ACC asked Didi to consider delaying the IPO until an internal review of the security of his data is completed. , according to people familiar with the matter.

Didi dominated the country’s on-demand transportation industry for years, acquiring the Chinese business of US ridesharing group Uber in 2016. Uber retained a stake in Didi alongside Japanese SoftBank and Chinese Tencent.

Didi’s main ridesharing platform has been banned from registering new users until the investigation is complete, a development that threatens its market share and expansion plans. Its platform and 25 others used by Didi employees and drivers have been removed from Chinese app stores over fears of “serious breaches” of personal data law.

Didi “was fighting with his hands tied behind his back,” said Tu Le, founder of Beijing-based consultancy Sino Auto Insights.

Didi has been caught between pressure from investors to prove he can grow and avoid further angering regulators, Le added. “They will hesitate to do anything until the audit is complete.”

Didi’s speech to investors during his brief tour last month was that he would continue to grow by targeting dozens of underserved mid-sized cities.

At the company’s current growth rate of around 50 million users per year, stopping recordings under the App Store ban could cost Didi more than 4 million users per month. survey, according to Financial Times calculations.

While he is the subject of the CAC investigation, Didi is placing his hopes of expansion on Piggy Express, a cheaper service launched in March 2020 targeting young users in small towns that has not been withdrawn from the Chinese app stores.

Analysts said Didi needs to retain its fleet of drivers as competition increases. In May, the company and other ridesharing groups were warned by China’s transportation ministry about high commissions from drivers, forcing Didi to publicly explain why some were charged 30 percent of fares.

But Didi’s efforts to keep his drivers could threaten his cost control. In the first quarter, the company cut profits and other incentives it pays drivers to $ 5.7 billion, from $ 19.2 billion in the same period in 2020.

A Didi driver in Beijing told FT that Didi had recently introduced driver subsidies of Rmb100 to Rmb150 for 30 trips.

However, the driver added that the municipal transport police had started tougher checks on carpool permits in recent weeks, suspending those who broke the rules for three months.

Didi “can only lose pilots,” she said.

Additional reporting by Emma Zhou and Nian Liu in Beijing

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