China’s ride-hailing behemoth, Didi Chixung, stated on April 8, 2022 that it will be closing its South African operations. Since its first launch in the country just over a year ago, this marks its first appearance on the continent. There are 16 countries where the ride-hailing company operates, including Russia and Australia, and it claims to have 500 million customers.
It was a “tough decision,” a spokesperson for Didi South Africa tells TechCrunch. Our goal was to facilitate a smooth transition for everyone, and we would like to thank our employees, drivers, riders, and partners for their generosity and support.”
With Didi’s debut into the South African market, Uber and Bolt, the two most dominant ride-hailing companies in the region and throughout Africa, could face more competition. However, it looks that DiDi has struggled to keep up with the likes of Instagram and Snapchat. In South Africa’s e-hailing market, Uber held 71 percent of the market, while Bolt held 28 percent. Drivers were offered cheaper commission rates and consumers were offered ride-sharing options when Didi first began, but the platform didn’t see much growth.
Didi’s third COVID wave arrived in South Africa two months after it launched, prompting yet another lockdown as the country saw roughly 12,000 infections each day at the time of the lockdown. A mishap that had an impact on travel plans and reservations.
DiDi is the second-largest ride-hailing service after Uber. With a worth of $21 billion, DiDi comes in second to Uber’s $80.5 billion. By exiting South Africa, Uber will be able to focus on other regions where it can have a greater beneficial impact, according to the ride-hailing firm Didi is likely to begin operations in Nigeria based on past recruiting announcements.
The SA spokeswoman stated, “We have re-evaluated where we can make the most positive impact in the short-term and are focusing on creating even deeper skills in other existing areas.
Due to heightened regulatory pressure at home, there are concerns about Didi’s ability to expand globally, despite its growing domination in the ride-sharing market.
After the Cyberspace Administration of China (CAC) announced that it was investigating Didi’s handling of customer data and ordered the app to be removed from mobile app stores in China, Didi’s widely anticipated US IPO was scuttled. Ride-hailing service Uber’s stock has plunged more than 80 percent since its first public offering. As a result of political and regulatory issues, Didi had to postpone its European expansion.
Chinese officials reversed course in March 2022, saying they would encourage foreign-listed stocks—the very policy that had pushed DIDI’s US shares down by a significant amount. It’s a sign that DiDi’s regulatory restrictions may be loosening.