Chinese companies get together to compete with DiDi
Didi Chuxing (or DiDi) has become so strong in China’s ride-hailing space that it may have driven Uber out of the country. Chinese tech and retail giants Alibaba (BABA), Tencent (TCEHY), and Suning have now joined hands with three auto companies—FAW, Chongqing Changan Automobile, and Dongfeng Motor—to launch a ride-hailing venture to compete with DiDi, according to Reuters.
The $1.45 billion joint venture is set to focus on new energy vehicles. Reuters reported that the three auto companies would each have a 15% stake in the new venture, Suning would have a 19% stake, and Alibaba’s and Tencent’s investment units would have the remaining stake. According to Reuters, China’s ride-hailing market is the world’s largest, estimated to be worth $23 billion.
Alibaba and Tencent are trying to diversify
Alibaba and Tencent, fierce competitors in the digital wallet space, are coming together for this rare co-investment. They seem to have taken a page out of SoftBank’s investment playbook. Both tech giants have invested billions of dollars in upcoming startups, particularly in China and India.
Tencent has been trying to diversify from gaming, which is slowing down due to Chinese regulations. The company’s shift to cloud and financial technology is already paying off.