Lyft is reaching into China in a big way. It announced today that it's formed a partnership with Didi Kuaidi, a Chinese taxi-hailing giant, to allow its users to hail cabs in China. Though the cabs will all be on Didi's service, they'll be accessible to people through Lyft's app — something that it expects to be a major convenience for the nearly 8 million people who travel between the US and China each year. Likewise, users of Didi's app will be able to hail Lyft cabs while they're in the US. In addition to the partnership, Didi is investing $100 million into Lyft, which was last valued at $2.5 billion. Didi is valued at $16 billion, according to The Wall Street Journal.
"We're leading a new trend for the country champions to actually work together."
The partnership should put further pressure on Uber, which has made a goal of expanding widely through China — and quickly. For now, Didi says that it controls 90 percent of the taxi-hailing app market in China, receiving 10 million ride requests every day. By investing in and partnering with Lyft, Didi is able to put pressure on Uber both in its home country and abroad. The companies say that their partnership will stretch beyond integrating their cab offerings, with plans to collaborate on technology, product development, and local resources. Lyft founder and president John Zimmer calls this partnership, "the first step toward global coverage."
On its own, Lyft's presence pales in comparison to Uber's. Lyft currently operates in 65 cities, all in the United States, while Uber has expanded into over 300 cities across 50 countries. This partnership makes Lyft accessible to a much wider audience, with Didi having a presence in 360 cities across China. That speaks to why Uber has called China its first priority for global expansion, setting a goal to have a presence in 100 cities by about this time next year.
"[The partnership] allows us to go very deep in a place like New York."
Zimmer says the partnership should help Lyft compete with Uber in the US simply by allowing it to put more resources there. "[The partnership] allows us to go very deep in a place like New York," he says. Lyft obviously has reason to worry about its much larger competitor; Didi, on the other hand, seems to brush off a suggestion that it stands a chance. "Uber is a good competitor but we feel really good about our position in China right now," Jean Liu, Didi's president, said at an event today. "The numbers are very self explanatory." Liu also says that Didi's breadth of offerings is going to be "really hard to copy by anyone else."
While Uber intends to expand on its own, Didi's feeling is that forging a series of partnerships with local companies offers it an advantage. "We're leading a new trend for the country champions to actually work together," Liu says. Liu calls ride sharing a "very unique business" that required teams of local experts and an understanding of what passengers and riders in every given local are looking for. By partnering with ride sharing services that are already up and running — like Lyft — Liu says companies can "resolve the conflict" that comes with foreign companies attempting to fit into an unfamiliar market.
So is there another partner lined up for another big market, like India? Zimmer declined to say, but it certainly sounds like plans are in motion. "We'll announce different parts of our global strategy down the road," he said.