Didi to raise $1bn to take on Uber China

Recent reports suggest that Chinese ride-hailing giant, Didi Chuxing has received at least $1bn in commitments for a new fundraising round, which is said to be oversubscribed, and would value the company at over $20bn, following last year's fund raising activity which raised $3bn taking the firm's valuation to $16.5bn. Didi Chuxing's new fundraising would provide more cash for its escalating battle with Uber’s Chinese affiliate, Uber China. Both companies, backed by local partners and investors with deep pockets (Tencent and Alibaba are among Didi's backers; Baidu has invested in Uber), are expanding aggressively across China, handing out subsidies to attract drivers and riders to their competing services. 

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Two fairly interesting developments emerged Thursday regarding Uber’s market-dominant rival in China, Didi Kuaidi, which this week confirmed it has closed a $3 billion funding round. (We reported on that round Wednesday before it was confirmed to have closed.)

Firstly, Didi said it has rebranded itself as “Didi Chuxing,” accompanied by a new logo, according to South China Morning Post (SCMP). An English-language release on the announcement doesn’t seem to be kicking around anywhere, but we have reached out to Didi.

The point is that “Chuxing” means “commute” in Chinese, rather than “kuaidi,” which means “quickly.” Considering Didi has moved into more than just taxi-hailing — now offering premium driver services, car pooling, and even bus sharing — it makes sense to include the broader commute word in its name.

Update: I’ve been informed by a Chinese speaker that “kuaidi” in this case is actually a combination of “quick” and “taxi,” based on the Chinese characters used.

But that’s assuming it felt the need to rebrand in the first place, which it clearly did. Like Uber, Didi is trying to shake off the image that it’s operating in a legal grey area as laws are still trying to catch up with the technology. Police in China’s southern city of Shenzhen have reportedly criminalized services like Uber and Didi recently, and drivers in nearby Guangzhou have been hit with heavy fines of over $15,000.

The rebrand, therefore, is likely not just about a move into broader commuting services — Didi has made clear that it wants to evolve into a global transport network — it’s probably also a fresh start in the eyes of regulators and consumers who want to feel comfortable using its service.

It’s possible that the move even came after talks with government bodies, though that’s just speculation on my part. China is known to work pretty closely with its major tech companies, and Didi is now worth somewhere around $16.5 billion.

Didi also said that it will update its app to reflect the new branding, according to the SCMP report.

The second major development in the Didi story comes via The Wall Street Journal, which reported Thursday that the company joined fellow Chinese Internet giants Alibaba and Tencent in a $150 million May funding round into San Fransisco-based car-hailing company Lyft, bringing its valuation to $2.5 billion. Tencent joined existing investor Alibaba in this round.

Lyft has recently been making headlines for poaching Twitter engineers and managers, alongside rival Uber. The microblogging service is facing internal turmoil as it looks for a new chief executive (and, like Uber, is very interested in Asia).

Because Alibaba and Tencent are both themselves investors in Didi, this looks like a joint attempt to fund Uber’s competitor in the U.S., while Didi continues its fight against the service in China, where Uber remains a market underdog.

Uber’s chief executive Travis Kalanick most recently claimed the company has tied up as much as 30 percent of the market there, but those numbers are certainly subject to scrutiny (i.e. Didi claims to have more than 80 percent of the private car-hailing market).

Uber will also have celebrated Baidu Maps hitting 300 million active monthly users on its mobile app this week, as it benefits from tight integration that allows users to hail a car from inside the maps app, thanks to a partnership inked with Baidu in December last year. (Baidu is also a substantial existing investor in Uber, which said Tuesday it plans to enter 100 more Chinese cities over the next 12 months.)

Between the Didi rebrand and its reported Lyft investment, the car-hailing wars in China are certainly not boring anyone — and, perhaps even more interestingly, seem to be spilling over onto U.S. soil in a bigger way than many yet realise.