A smartphone shows the two apps, Kuaidi Dache and Didi Dache, which together control 99% of China's domestic market for booking taxis
© AFP

Apple is to invest $1bn in Chinese ride-hailing app Didi Chuxing and Uber’s main competitor in the country, marking the biggest injection received by the lossmaking company.

Formerly known as Didi Kuaidi, the company has been valued at $20bn in recent funding rounds, up from $15bn last July. Apple did not specify what size of stake it will receive.

While the investment is small compared with Apple’s $233bn cash pile, it will be the US group’s largest minority investment and marks a departure from its historic aversion to tapping this to invest in start-ups. While tech peers such as Alphabet and Intel have active venture arms, Apple has traditionally opted to incubate new ideas in-house or periodically buy companies.

Jean Liu, Didi’s president, said she had met Tim Cook, Apple chief executive, on April 20 at the US company’s headquarters in Cupertino, California.

Mr Cook professed to being “extremely impressed” by Didi’s business and management team. “We look forward to supporting them as they grow,” he said. “We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market.”

Despite losing an estimated $1bn last year, Didi has seen its valuation jump to become one of the giants of the Chinese internet, and counts Alibaba and Tencent, the country’s two largest internet companies, as main shareholders.

Phil Lisio, head of The Foote Group, a Shanghai-based consultancy, said: “Apple’s got so much money, and no organic growth accelerators. So aggressive M&A with market leaders in China makes sense.”

Didi is still losing money but in February said it had reached break-even in more than half of the 400 Chinese cities in which it operates.

The company said it hit a milestone 10m rides per day in March, which the group claimed made it “the largest mobile-based transportation platform in the world”.

Didi now said it completes more than 11m rides a day, serving close to 300m users.

The group has also formed an alliance with ride-hailing companies Lyft in the US and Ola of India, two of Uber’s fiercest rivals

Zhang Xu, an expert on China’s car-hailing market at Beijing consultancy Analysys International, said Apple’s motives were “the strategic value of siding with an emerging Chinese internet giant. Why has Apple chosen Didi over Uber? Simply because it is Chinese.”

The two companies could collaborate in a number of areas, said Jean Liu, Didi’s president. “In terms of product integration and marketing, there are a lot of things we can work together on,” she said.

One of those ideas has been Apple’s secretive car project, which the company has never publicly acknowledged. Several of Apple’s recent acquisitions have been of small start-ups with technologies that could be useful in an intelligent car. Didi and Apple did not say whether they might work together on the car project in future.

Another area is in payments — Apple launched its payment app Apple Pay in China in February and may see integrating it with Didi’s mobile app as a way to broaden acceptance.

In a statement announcing the deal, Cheng Wei, Didi’s founder and chief executive, said the investment was “an enormous encouragement and inspiration” for the four-year-old company.

“Through this investment, Apple becomes a strategic investor of Didi, and joins [internet groups] Tencent, Alibaba and other key supporters to help further Didi’s mission of building a data-driven rideshare platform to serve hundreds of millions of Chinese drivers and passengers.”

Other investors include the country’s sovereign wealth fund, China Investment Corporation, which took a stake last summer. Other investors in recent funding rounds include Capital International Private Equity Fund, Ping An Ventures, Singapore’s sovereign wealth fund Temasek and hedge fund Coatue Management.

Additional reporting by Leslie Hook in San Francisco and Ma Fangjing

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