Why China’s Didi Chuxing will beat Uber

By Michael Spencer

In an age where Uber continues to lose an insane amount of money and ride-sharing to local rival Lyft in key cities, I would bet on Didi becoming more valuable than Uber, here’s why. 

Didi has raised nearly $20 billion. and is quickly in 2018 moving into Asian markets such as Japan and Chinese Taipei. In addition, Didi’s autonomous driving technology is improving in leaps and bounds. 

Didi Chuxing has the potential to become one of China’s iconic tech companies. With its purchase of bankrupt bike sharing start-up Bluegogo, and more than a year after taking over operations of Uber China, the Beijing based company now has a market valuation of US $56 billion. 

Photo taken on Aug. 1, 2016 shows Apps of Didi and Uber on a cellphone of a citizen in Hangzhou, capital of east China's Zhejiang Province.[Photo: Xinhua]

Didi will likely dominate high-population densities regions of Asia and become a world leader in smart city products, services and innovation. Uber is going to have much more local U.S. competition in the era of self-driving transportation and it isn’t even profitable. The reality is Uber has been bleeding cash and for a long time. Uber in Q4 2017, posted a loss of $1.1 billion on just $2.2 billion in revenues. In 2016 alone, it lost $2.8 billion US. 

Didi (2012) is a full three years younger than Uber (2009), but has in that time exceeded expectations. Beijing based companies like Didi and Toutiao (Bytedance) are actually showing the world they can scale globally faster and represent a new breed of Chinese tech company highly skilled at localization. 

As of July, 2017 Didi has nearly as many users as Uber, and by now it probably has more. Competition for international markets with Uber could heat up, with Mexico and Japan being the likely targets in 2018. Didi rivals Uber as being present in upwards of 400 cities globally already. 

Didi as the “Uber of China” will be more valuable than Uber itself soon. This is nearly guaranteed as it operates in a bigger market and lacks local competition being a virtual lock to do important work in the field of artificial intelligence. Let’s not forget, Didi is the second-most valued, privately owned firm in the world after Uber. There’s little reason to suppose Didi won’t become the leader in transportation as a service and eventually acquire the merger of Ofo and Mobike and be a leader in vehicles rentals in all of Asia. 

Didi Chuxing’s success is also symbolic of China’s ascension as the leading country, over the United States, in the future of technology and artificial intelligence. Didi’s latest funding round in December of $4 Billion means its ready for global expansion, and along with JD.com is really one of the companies to watch in 2018. 

Since Japan’s Softbank has partnered with both Uber and Didi, Didi’s joint venture in Japan is going to be something special in 2018. SoftBank recently became Uber’s largest single shareholder with a $7.7 billion stake, but the data will show it’s actually Didi that will quickly become the favored daughter. When comparing companies that are competitors in global scale, the winner will nearly always be the one with penetration in the bigger market and this will also be the case of Didi vs. Uber. 

Uber in the past year has had a talent exodus, multiple lawsuits along with the departure of their CEO. Meanwhile, for Didi in the race to develop autonomous taxis, recent evidence puts them ahead to where they had been believed to be. This positions China on the cusp of being a leader in the next generation of transportation. 

(Michael Spencer is a Canadian social media strategist and an observer on technology.)