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Didi overhauls business operations to match regulations

Didi Chuxing, China’s online car-hailing service, has restructured its business operations and management in a move to adapt as strict local regulations have altered the market environment in China.

Four months after authorities tightened rules on car-hailing, Didi’s CEO Cheng Wei and president Liu Qing told employees in an internal memo that the company is reorganising into four business units, according to Caixin. They are ride-sharing and taxi services, high-end car-booking and chauffeur services, public transportation services and overseas business operations.

The public transportation and overseas business divisions are new. According to the memo, the public transportation unit will work with local governments to build smart transportation systems using big data technologies provided by Didi. The company has set up partnerships with local government-backed bus operators in Tianjin, Shenzhen and other cities.

The overseas division is part of a stepped-up effort to expand abroad. In January, Didi reported an investment in Brazil’s largest local car-hailing app provider 99taxi. While Didi didn’t disclose the size of the investment, a local newspaper said it was valued at more than $100 million.

Didi, which controls about 80% of China’s car-hailing market after last year’s buyout of Uber’s China unit, faces mounting pressure from Chinese regulators. Several local authorities in recent months have tightened rules for ride-hailing vehicles and drivers that threaten Didi’s business.

Beijing and Shanghai in December issued regulations requiring all drivers for car-hailing companies to be permanent city residents and their cars to be registered locally. The rules effectively made the majority of Didi’s current drivers and vehicles ineligible.

Didi’s car-hailing business has retracted in recent months as it cut subsidies to drivers and removed ineligible drivers. The company has yet to make its online car-booking services fully compliant with the new rules.

It also announced the company’s five strategic key words for 2017: inner work practice (修煉內功), smart traffic (智慧交通), premium car service (專車決勝), global distribution (全球佈局), and realisation of its so-called “Hong Liu” strategy (洪流落地).

As one of Didi’s five strategies for 2017, the company established a new smart traffic team, which includes the public transportation business unit formerly known as bus business unit. This new team is led by Zhang Wensong. Cheng and Liu said in the email that they hope Didi could become the largest smart traffic service provider in the world.

In addition, Didi established an international business unit led by Zhu Jingshi, head of the strategy unit.

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