With a view to rapid acquisition of market knowledge, and paving the way for future collaboration, Apple’s well publicised investment in Chinese car hailing app ‘Didi Chuxing’ sees it join ‘Alibaba’ and ‘Tencent’ as fellow backers in the Uber-esque company. At £693m, it is the largest investment the app has so far seen, and with new, innovative players hitting the car-hailing scene regularly, the money will certainly go some way in enabling ‘Didi’ to maintain its edge on the competition.
And its success so far may be ascribed in part to its rival company Uber not enjoying the same instant monopoly over the market in China as elsewhere, even with Baidu, the well-known search engine, on board as an investor. Although the choice for well-off clientele, Uber has made no secret of the losses accrued in China, pumping money into discounted rides, and struggling to gain momentum. Despite pipping Didi in the ‘premium service’ department, Uber falls behind on popularity, and Apple’s recent investment in Didi could see it fall even further.
this investment is a step beyond the tech-comfort-zone
So, why Apple? Why Didi? Why invest? The rarity of this tech giant’s investment suggests a very careful choice, and certainly a strategic one. With the company’s largest acquisition its $3 billion spent on headphones giant ‘Beats’ back in 2014, this investment is a step beyond the tech-comfort-zone, and translates to dipped toes in two waters for Apple; both in car technology, and the so-called ‘sharing economy’ (the commercial backdrop to apps like Air BnB). The stand-out aspect of these markets is the chance for rapid growth and innovation; and with signs of maturation in the iphone business that first set the foundations for Apple’s tech takeover, the investment seems perfectly timed.
But just how far would this ‘growth’ go? With the deal perceived by many to signify interest not just in the Didi app, but in the automotive industry as a whole, there is naturally talk that Apple is looking to develop an electric or self-driving vehicle. This would be a few commercial steps further than its current in-car entertainment facilitator ‘CarPlay’, and could prove an excellent business decision following the company’s first quarterly sales decline in 13 years. So, the next red-hot product Apple gets to market could well indeed come off the back of future collaborations with Didi.
the move highlights [Tim] Cook’s steadfast confidence in the Chinese economy
Additionally, Cook recently stated that alongside a ‘strong return on invested capital’, he hoped the business move would aid with an understanding of ‘certain segments of the China market’, alluding to the importance of knowledge in such a fast-moving tech-centred commercial world. Despite Chinese regulation recently shutting down Apple’s film and online book services, the move highlights Cook’s steadfast confidence in the Chinese economy, and drive to ensure a better relationship with China. Indeed, Ben Bajarin, an analyst, suggests that (this deal) is ‘as much about sending signals about their seriousness in the country as it is about helping Didi build a ride-sharing platform’.
All in all; an interesting and exciting deal, and probably a very bright future for both Apple and Didi Chuxing. Watch this space.