From one of the poorest provinces in China to the conquest of Beijing with Didi. From his beginnings in a foot massage company to one of the major IPOs of 2021. Which perhaps, however, will never happen. The one of Cheng Wei is a symbolic story of the Chinese dream, the one implicitly initiated by Deng Xiaoping at the beginning of the 1980s and then made explicit in all its force by President Xi Jinping in the last decade. A story of a self made man who has built his fortunes through innovation that has made Didi Chuxing much more than a “Chinese Uber”, as it is often defined in a reductive way.
Antitrust investigation into Didi Chuxing
But yet, now Cheng could receive the same treatment reserved in the past to Jack Ma, the famous founder of Alibaba. Just as the Ant Group IPO had been blocked, now the one (just announced) by Didi Chuxing on Wall Street could suddenly hang in the balance. Yes, because the Chinese authorities have started an antitrust investigation into the company. The hypothesis is that Didi flew anti-monopoly laws and used competitive practices aimed at excluding rival companies from the market.
So Didi conquered Uber in China
Cheng’s creature, founded in 2012, has progressively conquered the burgeoning Chinese urban transport market. In 2016 he bought Uber China, which had begun to lose about a billion dollars a year due to the ruthless competition and the widespread diffusion of Didi in the immense Chinese megalopolises. In the same year, after getting rid of the main international competitor, Didi closed a 4.5 billion investment round and the following year a further 5.5 billion round. Investors also include heavyweights such as Apple and the Japanese fund Softbank, which today holds 21.5%.
Didi is more than a “Chinese Uber”: technology and diversification
The partnership with Softbank has given a boost to research and development in the field of technology and artificial intelligence. All while a strong process of diversification that from the classic black cars (of different ranges depending on the Didi program to which you are enrolled between Express, Premier, Luxe) have been joined by buses, bike sharing, food delivery but also insurance and financial services.
Landing abroad: 600 million users in 400 cities
The constantly improving accounts have also led Didi to invest abroad, where its presence is increasingly rooted. In particular in Asia, Australia and Latin America, but also in Russia, lastly, in South Africa. To understand its spread in China and abroad, just know a few numbers: about 600 million users in over 400 cities around the world, with tens of millions of registered drivers.
The numbers of Didi and the IPO on Wall Street
In 2020 it registered a revenue of $ 21.6 billion and in the first quarter of 2021 it reported revenues of 6.4 billion. It had a loss of 1.6 billion last year but started 2021 with a net profit of 800 million dollars. Better than any other global competitor. Spatial numbers, which have (or would have) led to the last step, what would be (or would have been) the definitive consecration: the IPO on Wall Street, one of the main if not the main of 2021 in the technology sector with an expected value between 70 and 100 billion dollars.
Cheng Wei like Jack Ma? Despite loyalty to the Party
Now, however, there is an abrupt and unexpected stop. Unlike Jack Ma, who had criticized the Chinese Communist Party shortly before Ant’s IPO stop, Cheng has always kept a low profile and indeed has repeatedly shown himself to be faithful to the government and party line. Enough to launch a campaign to recruit members of the Communist Party in 2018.
This was not enough to avoid the antitrust investigation just launched on Didi. The novelty could have repercussions not only internally but also on the company’s listing itself, suddenly involved in a trend that has been underway for some time in China. That is, since Xi decided to tighten the private sector. This is for two reasons. The first is cheap and stems from the Party’s desire to control even more all components of the life of the country, especially after the launch of the “double circulation“and the brake on investments abroad.
Xi expands control over the economy and stops the “oligarchs” in the bud
The second reason is politico. Xi knows how many problems the oligarchs have created in Russia and wants to avoid the emergence of potentially critical figures, and powerful for their public position. Cheng, born in the southeastern province of Jiangxi (which while bordering China’s wealthiest provinces has some of the lowest wages in the country), faces an unexpected challenge. He, who first arrived at Alibaba from a foot massage company and then launched the giant that beat Uber in China, has already won many in his life. This, however, appears particularly insidious.