Team, market, competition: Didi starts the war overseas

2018 is not a good year for Didi. After merging the biggest competitor Uber China, Didi's market share once exceeded 90%. Didi's overall business, which does not have to be subsidized, is thriving. It seems that it is finally able to move towards profitable roads. According to media reports, in the 17 years Didi overall loss of 3-4 billion US dollars, 18 years estimated that the main business will be profitable. But the next story can be described as a sharp turn. Under the new competitors' entry, security vicious incidents, and overall industry coldness, Didi was exposed to an overall loss of 10.9 billion in 18 years. In the end, it is not allowed to take measures such as halving bonuses and business abolition at the end of the year to announce the collective "winter".

But in this case of tightening the belt, Didi still has a team recruiting a large number of people to accelerate the expansion - this is Didi's international business. At the end of last year, Cheng Wei announced that he set up a strategic business group and set up an international business department. He followed Liu Qing to Didi from Goldman Sachs and used his own power to integrate Didi into $3 billion to lay the foundation for Didi in the war of attrition. Stephen Zhu, who has made a great contribution to his career, has served as a strategic business group and has also served as the head of the international business unit, officially blowing the horn for Didi's overseas expansion. However, overseas markets may not be that simple.

On the one hand, this means that Didi has to compete with the old rival Uber and the long-standing local team; on the other hand, although Didi has a brilliant record, it is still a very young company, for overseas governance, overseas expansion. Is it ready? Before I understand the results of Didi's current overseas market, the first question to be discussed is: Why is Didi going out to sea? Going out to sea and internationalization, in fact, as early as the competition with Uber, has been remembered by several executives of Didi. Cheng Wei mentioned in the interview in 17 years that Uber's global strategy touched Didi: "Uber came to China three years ago and I realized that we have a low Uber latitude. Like the octopus, the head is in the United States. A tentacle to China, so it is useless to attack only one tentacle."

It is precisely because of this that Didi has already started to invest in Lyft, Grab and other places to play players, and established the anti-Uber alliance on a global scale. But this is not enough. For Didi, internationalization is still one of the keys to proposing valuations and moving toward the market. According to information disclosed in the Wall Street Journal in the second half of last year, after several storms, Didi's valuation dropped from $56 billion to $50 billion. Correspondingly, Didi's North American ally, which has launched an IPO sprint this year, Uber's major rival in North America, Lyft, is expected to be valued at $20-25 billion. Uber, which currently covers 60 countries around the world, has been robbed of the top spot on the road to listing, but has rushed to $120 billion from the company's valuation.

This is from 50 billion to 120 billion in space, with a credit for Uber's autopilot story, and a place for Uber Eats, but it's more of a data support for the global market. For Didi, this is the value of overseas business that has been rounded up with the takeaway business. Internationalization is also the "second cosmic speed" that helps Didi break through the ceiling. At the 16th China Internet Conference, Liu Qing once made a calculation, indicating that Dudi’s daily average of 14 million orders was completed. In addition to the optimistic value of China’s 800 million urban residents, the daily optimistic value of 1.3 billion times, Didi’s market penetration rate. It's about 1%, and San Francisco is 15%. This was the basis for the good vision of Didi's high growth rate at the time. But the irrationality of this estimation logic itself is obvious: How many people in the 800 million urban population will choose to travel by car every day? How does the sparse public transportation network of the western United States in San Francisco compare with the “national conditions” of Chinese cities and public transportation?

Judging from the single-digit growth in recent years, the growth space of the domestic market is not so impressive: in 15 and 16 years, Didi realized a leap from daily average million to daily average of 14 million, but in the latest public In the data, in March 18 this figure stopped at 26 million, and Didi never disclosed this number publicly. Even so, it shows that the domestic market may have entered the high stage.

From another perspective, the imagination of the domestic taxi market may have been very limited. According to the 2018 "Special Car Market Research Report" released by Aurora Big Data, at the end of May 18, the number of users of the online app market was 185 million.

In July of the same year, as of CNNIC's release in June 18, the size of China's mobile Internet users was 788 million. Roughly estimated, the market penetration rate of the online car market among all mobile users has reached 23.5%. This figure will only be higher in first- and second-tier cities, and in the third- and fourth-line markets where the size, population, living radius, and residents' income are much smaller, the market ceiling may not be high. At the same time, the challengers, such as the taxi, the Shenzhou car and the US group taxi, are still trying to get a cake from the market of Didi. Although the overall situation of the rivers and lakes has been fixed, the challenger will never disappear.

The regulatory sword that has been hanging over the top of the travel market has made the domestic market a bit bitter. At this time, Didi has cherished the overseas market for many years and has become a natural choice. "Going to the sea means opportunity, but the situation is never clear." Is the overseas market really a sea of stars? The answer is probably not that simple. When many domestic companies are passionate about discussing “going out to sea”, they often overlook the “overseas market” itself, which is a very general concept. There are actually hundreds of different systems, cultures, and market developments. Different markets, as well as the complex competition situation led by international giants and local players. After all, in the Internet age, there is nothing new under the sun. If you find an emerging market, there is a high probability that there will be similar competing products in the local area. If this emerging market happens to have no competing products, it is very likely that the market itself There are many limitations and challenges. For Didi, Latin America, Australia and New Zealand, which are currently expanding, Latin America, Australia and New Zealand are the former, and Japan is the latter.

Latin America: A core engine of growth that deserves high hopes

Let's take a look at the Latin American market. As one of the emerging markets, Latin America itself is on the rise and is a key market in the eyes of unicorns including Uber. According to foreign media reports, Latin America is currently Uber's fastest growing market in the world. Since entering the Latin American market in 13 years, Uber has covered more than 200 cities in 15 countries in Latin America, with a monthly active passenger number of 25 million. It is also Uber's most profitable country in the world and has made a significant contribution to Uber's global waybill. At the same time, in Latin America's domestic market, there is no relatively strong local player like Ola in India and Careem in the Middle East. For foreign giants, this is an unguarded fertile zone. Therefore, Latin America has naturally become the top priority of Didi in the global market. From the perspective of staffing, Didi also showed its emphasis on this market. Among the leaders of several regions in Didi, the most eye-catching is responsible for Qiu Guangyu in Latin America. Inside Didi, most people are used to Guan Xingyu called Tony. His background is quite solid – graduated from New York University's Stern School of Business. Qiu Guangyu worked at J.P. Morgan and Morgan Stanley before joining Bain Capital's Hong Kong office as vice president.

However, he has the background of the “investment banking department” and is also the “one who has been beaten by the people” in the mouth of Didi employees. In 2015, after Qiu Guangyu entered Didi, he was responsible for the strategic work of the special car business, and then, in the case of extremely lack of people, he also served as the user of the Didi car. Due to his good performance in both strategy and business positions, Qiu Guangyu was promoted as the general manager of the quality travel business group, which is the head of the Didi car business. It can be said that it is on the special business line of Didi. It’s really a fight. It has an investment background, corporate strategic capabilities and business practices, as well as overseas work experience. This background is indeed quite compatible with overseas business. At the beginning of last year, after Didi acquired the Brazilian taxi service company 99, Qiu Guangyu was appointed as the CEO of 99 and the general manager of the Didi Latin America region. Didi is currently on the line in Brazil and Mexico. It is also possible to test the water take-out business in Latin America, and the on-line preparations for the Chilean and Peruvian markets are already underway.

Australia and New Zealand: a place of hope for profit

Compared with the Latin American market that has assumed high growth responsibilities in the future, the Australian and New Zealand markets are stable and law-friendly, but they are already quite crowded. It is a basic disk that needs to be stable and stable. After entering the Australia and New Zealand in 12 years, Uber spent a lot of effort on the legalization of the network car in the Australia and New Zealand region, and finally saw the results in 2016. In addition to a friendly regulatory environment, Uber's profitability in the Australian and New Zealand markets has also made this market quite attractive. In 2017, Uber's revenue in Australia reached 152 million Australian dollars (about 107 million US dollars), after-tax profits of up to 4.4 million US dollars - for the travel companies around the world are still at a loss, this is undoubtedly a huge attraction . As a result, Uber Australia soon ushered in a lot of competitors. Beginning at the end of 17th, Taxify from Europe, Ola from India has landed in Australia. Didi began trial operation in the surrounding cities of Melbourne in May 18, and launched the express service in Melbourne in June. Deeply, I learned from the inside that Didi's business in Melbourne is “a whole amount of money”, and it is now gradually gaining a foothold in the Australian and New Zealand markets.

However, Didi's development in Australia and New Zealand still has some twists and turns, mainly reflected in the frequent exchanges. The original person in charge of the Australia-New Zealand region was Dillon Ye, a 17-year-old veteran of Lindi who joined Didi the previous year. This is probably a slightly abnormal choice. Ye Zhuliang joined Lenovo in 2000. He was responsible for Lenovo's sales of PC and mobile products in the Asia-Pacific region in Singapore. He is familiar with the Asia-Pacific market, but for the mobile Internet and travel business, he is a newcomer. Perhaps as a complement, Didi has also assigned a "vs." as a deputy. At the beginning of the Australian-New Zealand market, I was the deputy general manager of Australia and New Zealand. She has more than 4 years of experience in the travel market. She once worked for Uber China, and also used Zhang Yaxiong, who has several businesses such as Didi Express, Shuttle, and Minibus.

However, only half a year after Didi officially entered the Australian New Market, this team has made no small adjustments. Deeply learned, Zhang Yaxiong left Didi to join the English at the beginning of this year. The Title on the LinkedIn page has also been changed to the Senior Vice President of English. Ye Zhuliang also transferred from the general manager of the Australian New Market to the international market. The person in charge of the operation. Actually responsible for the Australian New Market, Marin, who previously served as the COO of Brazil 99. Like Qiu Guangyu, Marin is also a hard-working person. Marlin first joined Uber China in 14 years and played Uber Guangzhou's single-volume battle to the world. Later, Marin entered Didi in 15 years and served as general manager of Didi Huanan, director of user operations, and director of overseas operations. Since 17 years, he has served as vice president of COO and products for Brazil 99. This may be a good choice for the Australian and New Zealand markets, which currently have profitable hopes and are facing competitive pressures.

Japanese market: exploration in the fog

Compared to Latin America and Australia and New Zealand, the Japanese market may not be so optimistic. In fact, Japan itself is not a very ideal market. There is a term in Japanese business called Galapagosization, which means that in the context of isolation, the market is only optimized for the local market. Due to language, culture, economic level, etc., various markets in Japan often go out of the independent market and have to be sighed that “the Japanese market is like an island”. On this isolated island, the current global business trips are ruined. Difficult, there are several main reasons. First of all, the rail transit of Japanese cities is quite developed, and Tokyo is famous for its maze-like subway lines. Highly developed rail transit itself has allowed people to develop the habit of rail transit for a long time. For travel companies, it is also necessary to cultivate the habits of local users from the scene construction.

Second, regulatory restrictions also pose a huge challenge to the development of travel companies in the Japanese market. The operation of private cars in Japan is not legal. For this reason, Sun Zheng, the number one person in Softbank, used “stupidity” to evaluate the Japanese government’s ban on online car. Therefore, Didi Japan is currently operating in Japan in the form of cooperation with a taxi company, and can only provide a taxi service for taxis. However, the Japanese taxi itself is notoriously expensive, and the Japanese taxi company has always been known for its strong position. The possibility of bargaining itself is not great, which greatly limits the development potential of the Japanese travel market. In order to break the game, Didi's main competitor, Uber, is also pinning its hopes on non-travel business such as Uber Eats in Japan.

In addition, for Didi Japan, the complex is not only the travel market itself, but also the delicate cooperation between the local and various stakeholders. Unlike the wholly-owned Brazilian 99, a wholly-owned Mexican and Australian subsidiary, Didi Japan itself is a joint venture, and the joint venture is behind the global travel business of the Japanese Softbank Group – that is, the one used to be in the early days. Invest in Ali's Japanese investment company. Including Didi, Uber, Ola, Grab... The top few travel companies in the world's major markets are basically like Softbank. Because of this, Softbank, as a partner of Didi in Japan, seems to be a matter of course. However, the partners are board members of multiple competitors, including themselves and the number one competitor Uber, which makes the joint venture relationship slightly more subtle.

In addition to the joint venture party, the Japanese taxi company as a partner is not so good. Therefore, for Didi Japan, whether it is possible to balance the relationship and find the possibility of profit in such a complicated market situation is probably a big challenge in the next few years. Now Didi Japan's business has been launched in Osaka in September 18, and it is understood that the Tokyo business has also been tested in grayscale and is expected to be launched in the near future. "Returning to the sea itself, Chinese companies are facing challenges." Going to the sea is not a new topic for the Internet industry. Almost in the second half of the Internet, when the demographic dividend began, a large number of companies began to look at overseas markets. Once upon a time, it means that the land has been opened up, which means that the era of great navigation also means poetry and distance. But in fact, going to sea also means hardships and storms.

As early as 2012, Tencent, the giant, had launched a plan for the launch of WeChat, and even reported that Tencent had made a promotion budget of RMB 2 billion. But in the end, India, South Africa and other regions have put a lot of money, and ultimately there is nothing to stop. Recently, as one of the new big giants, the bytebeats, although in the overseas market dominated by India, have performed quite well, but they have also been reported to have a total loss of $1.2 billion in 2018 due to excessive overseas promotion costs. For each giant, going to sea means losing the flow of domestic product matrix, which means starting from 0 to promote the customer conversion path. The huge cost behind this test has tested the strength and determination of many domestic industry giants.

In addition, overseas governance, local regulation, and local culture are all challenges. For example, Didi in the early days of the taxi fight was once known for setting up a point near the train station and hand-loading the application to the driver. In overseas markets, can Didi, as an outsider, continue this kind of grounding and deep user style? For example, in the OPPO factory in India in 2017, it was once rumored that “Chinese managers tore up the Indian flag poster and threw it into the trash can”, and was protested by factory employees. For such cultural conflicts, China has long been in a single market. Are Internet companies ready for cross-cultural communication and management training for expatriate employees? And when the overseas giants entered the Chinese market, will they be re-enacted in Chinese companies entering overseas markets?

In contrast, competitors on the other side of the ocean seem to have much more experience than we do in these areas. Didi's angel investor Wang Gang once commented: "Uber is a company that can fight global business." "It's international management and systematic play, tried and tested globally, and Didi was passive in the early days. Didi is renting out. On the car's barrier, a special car was built. Uber used the people's Uber, directly subverting the price system of the entire rental industry with a highly subsidized strategy. Didi was forced to develop the express train, and the speed of development exceeded our imagination." Although Didi has won the Chinese market, its rivals' ability to innovate the business model and market rules of the global market is still admirable. The Chinese innovative enterprise that lost its home advantage can face the success of the past in the face of a new battle.

But even if the difficulties are heavy, the sinking market will be hotter than the demographic dividend, the price of the sinking will be high, and the domestic market will be urgently needed to break through the technological changes and business models, whether it is the demographic dividend in Africa, the Internetization in Latin America, and the movement in Southeast Asia. The upgrade is a gold mine that has been waiting to be experienced in the era of China's 20 years of rapid Internet development. It is full of imagination and temptation. Therefore, Didi or other Chinese emerging Internet companies that are interested in overseas expansion, even if they have foreseen a lot of risks and difficulties, once the pace of advancement is initiated, it means "not breaking the Loulan."The arrow was on the string and had to be sent.