Wednesday, April 4, 2018

China’s Didi Chuxing confirms it has launched a food delivery business

Amid plenty of speculation, China’s ride-hailing leader Didi Chuxing has officially entered the food delivery space.

The company, which acquired Uber’s China-based business in 2016, confirmed today it is running a pilot food delivery service in Wuxi, a city in southern Jiangsu province, with a view to expanding further. The service began on April 1, and Didi claims to have captured one-third of the market since then.

It’s a little early to get carried away with market share data — like ride-hailing, food delivery services launch with short-term offers and low prices to get initial attention — but it is clear that Didi has its eyes on another segment beyond point-to-point transportation services. The firm recently raised $1.6 billion (supposedly) for the new business and it began recruiting delivery drivers in Wuxi early last month, according to our Chinese partner site Technode.

Luo Wen, who heads up the new Didi service, said the company plans complete the Wuxi trial “as swiftly as possible” in order to launch the food delivery platform more widely. “We are looking to expand the service to more cities in the near term,” he added.

Still, it’s a surprise that it has taken the five-year-old company this long to get into food delivery.

Uber Eats went on a major global expansion last year, while regional competitors Ola, Grab and Go-Jek all entered the space some time ago. Yet Didi, a big dog with its $56 billion valuation and investments across five continents, is only just dipping its toes in now.

Right now the timing seems particularly apt given that China’s largest food delivery service is actively taking on Didi’s core business. Meituan Dianping, a $30 billion-valued startup, launched ride-hailing services over the past six months and this week it scooped up Mobike, one of China’s top two bike-sharing companies, in a $2.7 billion deal. The company has raised over $8 billion from investors, including a massive $4 billion round last October, so there’s money to burn to fuel its expansion ambitions.