Facing slowdown at home, ride-hailing service sets sights on expanding abroad
Last year was a good year for Didi Chuxing. China's dominant ride-hailing service saw its market grow by more than 50 percent in 2015. The good times, however, aren't expected to last forever. China's ride-hailing market is projected to slow significantly by 2018. Facing an eventual slowdown at home, Didi has set its sights overseas, hoping to capitalize on the growing number of Chinese tourists traveling abroad. On April 13, the company took its first step in that direction, by launching a ride-hailing service in the U.S. Its goal is to grab a piece of the American market, currently dominated by Uber Technologies Inc. Didi's overseas expansion will likely provide the company with new opportunities to grow as growth slows at home, analysts said.
While ride-hailing service firm Uber Technologies Inc has been making inroads in China, one of its Chinese competitors just touched tire to asphalt in its home market - the U.S.
Since Monday, Uber rival Didi Chuxing has been promoting the overseas version of its ride-hailing service on the popular miroblogging platform Weibo, promising to help Chinese consumers hail rides in 200 cities in the U.S.
To hasten its expansion, Didi has partnered with San Francisco-based Lyft Inc, which is reportedly the second largest ride-hailing service in the U.S. after Uber.
Under an agreement signed in September 2015, Lyft will provide the cars and drivers for Didi's U.S. service. The service was launched on April 13.
Didi called its decision to expand in the U.S. an important step toward realizing its globalization strategy, according to a statement it sent to the Global Times on April 14. The company plans to enter several other markets such as India later this year.
Didi has big hopes for its globalization strategy. Expanding to other countries and regions will provide China's largest ride-hailing service with new opportunities for growth, analysts said, just as growth in its home market is about to slow.
Slowdown at home
Backed by two of China's Internet giants, Alibaba Group Holding and Tencent Holdings, Didi has long dominated the country's fiercely competitive ride-hailing market.
Based on the number of hails, Didi held 79 percent of the market in the fourth quarter of 2015, according to a report issued by the Beijing-based market consultancy Analysys International in late February. Uber was a distant second, with only 8.7 percent of the market.
"The fiercely competitive and maturing domestic ride-hailing market can no longer provide Didi with rapid growth for either market share or transaction volume," said Zhang Xu, an industry analyst with Analysys International.
China's ride-hailing market will grow by 50.9 percent to an estimated 55.93 billion yuan ($8.64 billion) in 2016, according to the Analysys International report. However, annual growth is projected to slow considerably in subsequent years, decelerating to 16.4 percent in 2018.
