Uber seems to be facing an ongoing invasion of territory, or perhaps not. Didi Chuxing, the ride-hailing service giant in China, is planning for a launch in Australia towards the end of June. Australia is one of Uber’s dominant markets. After buying out Uber’s Chinese operations back in 2016, Didi has been expanding more into Uber’s territory with the launch of its operations in Mexico in April this year.
Didi entered Brazil in January through the purchase of ride-sharing company 99 and Japan in February through a collaboration with SoftBank. Meanwhile, Uber bid farewell to a couple of regions including eight countries in Southeast Asia with a plan to focus on core markets and strengthen operations there. These markets are now on their way to becoming a battlefield of sorts with Uber’s competitors coming in to grab a slice of the pie.
In Australia, Uber faces competition not only from Didi but also from Australian ride-sharing service GoCatch, Indian company Ola Cabs and European firm Taxify. Interestingly all these competitors are intertwined. Ola, Uber and Grab share a common investor in Japanese company SoftBank. Didi has investments in Ola, Taxify, Lyft and Grab. Grab is a major player in Southeast Asia and Didi is the leader in China. Uber holds meaningful stakes in both Grab and Didi.
Didi has a valuation of around $56 billion that makes it the most valuable start-up in the world
Didi has a valuation of around $56 billion that makes it the most valuable start-up in the world. Didi is looking to go global and although it is not likely to be easy, the Chinese firm is implementing its strategy in a methodical way. Alongside looking to enter markets that do not have tough local competition, Didi is moving into regions where top players already have positions. Didi expects to face difficulties with its entry into international markets, including Australia, due to political factors.
On the other hand, Uber’s strategy is to cut down extra weight and focus on profitable markets while also keeping a small share of the markets it does not operate in. Uber is the largest shareholder in Didi and it also holds a stake of around 28% in Grab.
So does Uber really have to worry about Didi or anybody else? Perhaps not. Uber knows what it is doing. The U.S. firm has taken a share in two businesses that have good potential for growth. Uber will reap the benefits from its investments and it won’t be alone.
Another company that is set to benefit from acquiring stakes in these ride-hailing companies is SoftBank. In the event of any mergers or such consolidation, SoftBank will be a winner with its multiple stakes. With the ride-hailing market projected to grow at a CAGR of 19.81% and reach $276 billion by 2025 (according to MarketsandMarkets) as well as autonomous vehicles set to change the landscape, anyone who has made the right investment in this space is set to benefit.