Didi – One app to rule them all.

Didi wisely lets in the 3^rd parties.

• Didi’s move to open its platform to 3^rd parties indicates that in China, the battle is now all about becoming a transport market place than it is about ride-hailing or becoming a robotaxi operator.
• Didi Chuxing, which has around 80% of the Chinese ride-hailing market, has opened its platform to 3^rd parties such that other providers of transport can offer their services through its app and through its platform.
• An initial experiment has been conducted with Tongcheng Network which is a travel platform that operates in China where rides provided by Miaozou (Tongcheng ride-hailing unit) can be summoned using the Didi app.
• This seems to have been successful and so Tongcheng appears to be exploring how it can expand its offering through the Didi app.
• One of the problems that Didi has had in recent years is regulation where drivers can only offer rides in the cities where they reside.
• This has limited supply of drivers as demand is highest in dense metropolitan areas where the cost of real-estate prices out the majority of drivers.
• Hence, availability, reliability and wait times have become issues when using Didi’s and everyone else’s app.
• This is why ride-hailing has not developed in China as it has in the USA meaning that a different approach is needed.
• Given that Didi has both brand and share at the moment, using this strength to entice others in to use its app is a very good idea.
• This is because, if regulation is going to keep China’s transport market very fragmented then the way to dominate the market is to offer ways to reduce that fragmentation.
• What Didi is offering is a simple and easy way to get access to on-demand transport services which will be much easier than having a multitude of apps all with different login and passwords.
• It also offers Didi the possibility to improve the user experience by intelligently offering combinations of different providers or options that suit the journey being taken and its context much better.
• This is how Didi can become the go-to place to buy or sell transport related services meaning that it will be able to charge more for these services and still hold market share.
• Consequently, I see this as a smart move by Didi and am a bit more optimistic on its outlook following the disappointment that came following the heavy hand of the regulator.
• Didi will be worth having a look at when it comes to market assuming that the issuer decides to leave some of the upside on the table for public market investors.