Apple Inc. has invested a whopping US $1 billion in Chinese ride-hailing app Didi Chuxing (formerly known as Didi Kuaidi). According to CEO of Apple, it will give them “a chance to learn more about certain segments of the China market.”
To get a perspective of how big Didi Chuxing is in China, lets dive into some numbers. The ride-hailing service controls over 87% of the Chinese market for car-hailing services. The service will have 10,000,000 drivers and 30,000,000 riders (source) in China by 2018. They are also Uber’s biggest competition in China.
In December 2015, Didi Chuxing made a strategic partnership with Ola, Lyft and Grab Taxi, so that travellers get seamless services in India, China, USA and Southeast Asia. It was a giant step from the company to take on Uber.
Before Apple made this big billion dollar investment in Didi Chuxing, companies like Tencent and Alibaba have also invested $2 billion in the Chinese ride-hailing service back in early 2015. It was then valued at around $15 billion but after the Apple funding, it is now valued at about $26 billion. The company will now try to broaden its offering to Chinese riders by expanding their premium car and carpooling services. It now operates in about 400 Chinese cities and more than 14 million Chinese car owners work with them. Also, they invested around $30 million in Indian ride-hailing startup, Ola in September last year.
Apple CEO Tim Cook is heavily betting the company’s future in the Chinese market and hence they have made a strategic investment in Didi. With more than $230 billion in cash reserves, we can expect Apple to acquire and invest in more companies in the near future.
On this announcement, Tim Cook, CEO at Apple, said:
“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market. Of course, we believe it will deliver a strong return for our invested capital over time as well.“