Bottom line: Didi’s merger with Uber China was driven by investor pressure to end their fierce price wars, and the newly combined company is likely to quickly reduce its subsidies and become profitable by year-end.
Didi Chuxing merges with Uber China
Just a week after reports emerged of a truce in the nonstop price wars between private car specialists Didi Chuxing and Uber China, the pair have suddenly announced a merger that will become the latest marriage of former bitter rivals in China. This latest shotgun union, which will put Didi Chuxing in the driver’s seat of the newly combined company, testifies to growing investor impatience at fierce price wars and resulting heavy losses that have become the norm in many emerging Chinese high-tech industries. Read Full Post…
Bottom line: Didi and Uber may reach a truce in their China price wars under pressure from their investors, and could ultimately merge their China operations in discussions that could begin later this year.
Didi, Uber under pressure to end price wars
The past year has seen some mergers of former bitter rivals due to financial pressures, and the latest reports indicate yet another such marriage could be coming between hired car services giants Didi Chuxing and Uber. The reports are grounded in word from insiders that the pair have begun talks about ending their bitter price wars, which have helped them to gain big market share but are also costing them millions or even billions of dollars in losses. Those talks have naturally led some to speculate that the pair might even merge, though in my view that possibility seems rather low, at least right now. Read Full Post…
Just a day after fast-growing car services firm UCar confirmed a major new tie-up with e-commerce giant Alibaba (NYSE: BABA), we’re getting more details about the new alliance that appears to auger an end to Alibaba’s previous relationship with homegrown Uber rival Didi Kuaidi. At the same time, Alibaba has just announced its largest overseas purchase ever by paying $1 billion for a controlling stake of Southeast Asian e-commerce specialist Lazada.
These 2 news items continue a recent acceleration in M&A activity for the hyperactive Alibaba, which is quite in line with the hyperactive nature of its founder and chief pilot Jack Ma. This kind of cyclical hyperactivity has become the norm for Alibaba in recent years. It typically sees the company’s high-profile activity go into overdrive for a year or so, only to come to a sudden halt when things become overheated and problems emerge. Read Full Post…
Bottom line: Alibaba’s new tie-up with Car Inc hints at a looming divorce with Didi Kuaidi, while a major new funding for its Koubei unit foreshadows a major new push that will further heat up intense competition in take-out delivery services.
Koubei seeks big new funding
Just days after reports emerged of a massive new funding for its Ant Financial unit, e-commerce leader Alibaba (NYSE: BABA) is back in the fund-raising headlines with big plans for its Koubei take-out dining unit. At the same time, an intriguing new story about a strategic Alibaba alliance with an aggressive new player in the hired car services space hints that the company may also be contemplating a divorce with national leader Didi Kuaidi.
Both of these stories reflect the catch-up game that Alibaba is playing in two important growth areas of the Internet. Alibaba previously had a presence in both through investments in hired car service provider Kuaidi and group buying site Meituan. But both of those partners entered mega-mergers over the last 6 months with their major rivals. As a result, Alibaba has divorced itself from the current Meituan Dianping, and is looking to build up its own rival Koubei take-out dining service. (previous post) Read Full Post…
Bottom line: Massive new fund raising by Ant Financial and Didi Kuaidi show there’s still lots of money looking to invest in emerging Chinese industries, though current valuations are overblown and likely to stagnate as China’s economy slows.
Ant Financial raises $3.5 bln
Every time I write that new funding seems to be cooling for Chinese tech companies, new reports emerge of yet another mega-funding. Two such new fund-raisings are in the headlines as the new week begins, led by a massive $3.5 billion new round for Alibaba-affiliated (NYSE: BABA) Ant Financial. The other mega-deal has homegrown car services provider Didi Kuaidi poised to raise $1.5 billion or more in new funding, as it vows to outspend an equally aggressive Uber for supremacy in the China market.
These 2 fundings show there’s still plenty of money chasing hot deals in China’s emerging industries, many in the tech and financial sectors. Two of my younger friends here have left more traditional media jobs over the last year to join the crowded field of private equity firms that are funding many of these deals, allowing hot companies like Didi Kuaidi and Ant to easily meet their targets and achieve very high valuations in the process. Read Full Post…
The following press releases and news reports about China companies were carried on April 9-11. To view a full article or story, click on the link next to the headline.
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Alibaba Affiliate Ant Financial Said to Lift Target in Record Tech Funding (English article)
240 BYD (HKEx: 1211) Electric Taxis Purchased by Nanjing Stay Stranded in Shenzhen (Chinese article)
New Didi Kuaidi Funding Round May Raise More Than $1.5 Bln (Chinese article)
China Said to Push for $1.16 Bln in Loans for Yingli (NYSE: YGE) (English article)
YTO Express to Sell Self to Shell Company for 17.5 Bln in Backdoor China Listing (Chinese article)
Bottom line: A new integrated car-ordering platform being rolled out by Lyft and Didi looks like a smart and low-cost move to expand their geographic reach, while LeEco’s electric car venture with Aston Martin is likely to sputter.
Lyft co-founder John Zimmer in Beijing for Didi announcement
Two of China’s top Internet companies are in car-related headlines today, led by a rapidly cozying relationship between Didi Kuaidi and US counterpart Lyft that has the pair preparing to roll out a joint platform for their signature hired car services. The other news has online video giant LeEco (Shenzhen: 300104), formerly known as LeTV, rolling out a joint venture to make electric cars with super luxury brand Aston Martin.
Both of these deals are incremental, since the original Didi-Lyft partnership was formed last year when the former invested in the latter. Likewise, LeEco was rumored to be near a tie-up with Aston Martin as early as last April. From a broader perspective, both moves show a growing confluence between the Internet and cars, which has opened up a wide range of new services that often incorporate GPS technology. Read Full Post…
Bottom line: A sudden spate of new mega-fundings by Meituan-Dianping, Lufax and JD Finance show there is still big interest in China’s private tech and finance sectors, despite the nation’s rapidly slowing economy.
Investors throw billions at Meituan-Dianping, Lufax, JD Finance
It seems I may have been a bit premature with my recent prediction that the mega-fundings that crested in China a year ago were finished. That’s my assessment after reading about 3 new mega-deals in the tech sector this week, all worth more than $1 billion. Leading the pack was recently merged group buying giant Meituan-Dianping, whose whopping $3.3 billion in new funding values the company at $18 billion.
That latest news came just a day after media reported another deal that saw peer-to-peer (P2P) lending giant Lufax just raise its own new funding of $1.2 billion, valuing the firm at $18.5 billion. Last but not least was announcement at the start of the week that the finance unit of e-commerce giant JD.com (Nasdaq: JD) had just raised 6.65 billion yuan, or just over $1 billion, valuing the firm at 46.7 billion yuan ($7 billion). Read Full Post…
Bottom line: A new global car services alliance led by Didi Kuaidi and Lyft won’t pose a serious threat to Uber, though the company could face ongoing challenges in China from Did stakeholders like Tencent.
Uber hits new obstacles from WeChat, Didi alliance
Uber’s road into China hasn’t been an easy one, and 2 new developments reflect the growing challenges it will face from incumbent players and their backers in what’s likely to become the world’s biggest market for hired car services. The bigger of those 2 news items has Uber’s chief China rival Didi Kuaidi forming a global alliance to counter the rapid rise of the US giant.
The latter news has local social networking (SNS) leader Tencent (HKEx: 700) locking Uber out of its hugely popular WeChat instant messaging platform for at least the second time this year. The reports cite Uber’s malicious sales practices as the reason for WeChat’s decision, and it’s true that the company is known for its aggressive tactics to win business. But it’s also noteworthy that Tencent is a major stakeholder in Didi Kuaidi, and no one would be surprised if WeChat’s move was at least partly aimed at protecting that investment. Read Full Post…
Bottom line: Alibaba and Tencent are likely to find themselves in a growing number of clashes in the year ahead due to consolidation involving their investments at home and a limited number of opportunities abroad.
Alibaba, Tencent back rival Korean Internet banks
In what’s shaping up as a trend for the year ahead, Tencent(HKEx: 700) and Alibaba(NYSE: BABA) are clashing once again in a newly announced South Korean Internet bank initiative in which both of China’s top Internet companies have an interest. It may be slightly overstated to call this particular instance a clash, since stakes held by Alibaba-affiliated Ant Financial and Tencent in 2 newly formed Korean Internet banks are probably quite small, probably at 5 percent or less.
But the reality is that these 2 Internet titans are increasingly clashing in a growing number of instances, as each invests in a wide array of areas to expand beyond their core businesses both inside and out of China. Those investments have put the pair in awkward situations in 2 of China’s largest Internet M&A deals this year, one involving the formation of hired car services giant Didi Kuaidi, and the other in a newer deal that has Meituan and Dianping merging to form a new leader in the group buying space. Read Full Post…
Bottom line: Uber’s 2016 China expansion plan looks aggressive but typical for the company, while Didi Kuaidi should invest its big cash pot on expansion and becoming profitable rather than unrelated services like O2O take-out dining.
Uber, Didi race towards 2016 with big investments
Private car service leaders Uber and Didi Kuaidi are both in the headlines as we race towards the end of 2015, a year that will go down as a watershed for this fast-rising sector both in China and globally. The first news comes from Uber, which is detailing an aggressive expansion plan for 2016 as China surpasses the US to become its largest global market. The second headline has Didi Kuaidi confirming a major new investment in online take-out dining site Ele.me, just days after separate reports said that e-commerce giant Alibaba(NYSE: BABA) also wants to invest in the company.
This year has certainly been a watershed for both Uber and Didi Kuadi in China, reflecting the rapid rise of their private car services that use location-based (LBS) GPS technology to challenge traditional taxi operators. Uber has said repeatedly that China is its top priority outside its home US market. Reflecting that position, Uber took the unusual step of spinning off its China unit into a separate company earlier this year, and also said it would spend $1 billion in 2015 to build up its service in the market. Read Full Post…
