April 23, 2020 / 3:30 AM / a month ago

Breakingviews - China’s Didi looks short on engine power

Logo of Didi Chuxing is seen at its headquarters building in Beijing, China August 28, 2018. REUTERS/Jason Lee

HONG KONG (Reuters Breakingviews) - Didi Chuxing lacks a spark. A new three-year strategic plan from China’s top ride-hailing outfit includes only vague targets and uninspiring direction, as big tech peers like Alibaba and Meituan Dianping grab post-Covid-19 opportunities in health and more. Didi’s $53 billion valuation will be harder to justify without a stronger drive.

The privately held company has been bogged down for the past two years after high-profile passenger safety scandals. Boss Cheng Wei is keen to move on. By 2022, the entrepreneur wants 100 million daily trips and 800 million monthly active users globally.

The targets unveiled last week are difficult to compare with Didi’s current position, and they are ambitious: as a comparison, the $49 billion Uber Technologies averaged less than 20 million daily rides and meal deliveries combined last year and just over 100 million monthly active users. That implies Didi is eyeing significant growth at home and abroad.

Any such expansion seems out of place as technology investors including Didi’s own backer, SoftBank Group, appear to be putting a bigger emphasis on profitability and governance than growth. And it remains unclear how the Beijing-based group’s other ventures in financial services, autonomous driving and more fit together into a cohesive strategy.

Perhaps most strangely, there is little effort to recognise how Covid-19 could bring changes. As cities across the People’s Republic ease restrictions, Didi is getting back to business as usual. But Meituan, for example, has started selling smartphones and other items alongside takeout and groceries as shopping habits shift. On Monday, e-commerce titan Alibaba announced plans to invest $28 billion in cloud computing: the coronavirus outbreak is accelerating widespread adoption of business software and other web services.

How the pandemic will change daily travel habits is not yet clear. Following the 2003 SARS outbreak, many Chinese commuters purchased personal vehicles for the first time to avoid public transit. If that happens again, it might benefit Didi’s car-services business which includes auto-leasing, maintenance and repair. Didi’s plan seems out of touch and suggests it isn’t looking in all its mirrors.

On Twitter twitter.com/mak_robyn

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