Chinese taxi service Didi leaves Russia
Didi taxi aggregator, owned by the Chinese company Didi Chuxing, will stop working in Russia and Kazakhstan on March 4, 2022, a service representative told Vedomosti. According to him, today the drivers and partners of the aggregator were informed about the decision.
The interlocutor explained that the company will not be able to “ensure the best results” of work in these countries due to changing market conditions and “other challenges”. He added that the decision was made based on “a thorough analysis of the market and experience for a year and a half.” “We decide which markets to invest in based on where we can achieve the best results for users and partners. Unfortunately, we do not see that we will be able to do this here in the short term, ”the interlocutor told Vedomosti.
Didi intends to focus efforts and increase investment to develop the service in Latin America and in some markets in the Asia-Pacific region, the Middle East and Africa.
DiDi is present in 17 countries. In Russia, the company began operations in August 2020 in Kazan. Now the service is available in 38 cities of the country, including Tula, Ryazan, Kaluga, Vladimir, Tver, Voronezh, Krasnodar, Ufa, Perm, Tyumen and Krasnoyarsk. In December 2021, the portal Autonews.ru, citing sources, reported that the aggregator is considering the possibility of entering the Moscow market in early 2022.
In June 2021, Didi held an initial public offering (IPO) on the New York Stock Exchange (NYSE), raising $ 4.4 billion. Chinese authorities opposed the US IPO, accused the service of violating the law on customer data collection . The investigation was also launched by China’s State Market Regulatory Authority, which suspected the company of violating competition law. In early December 2021, Didi announced its intention to delist with the NYSE. A new listing is planned on the Hong Kong Stock Exchange.
According to a Vedomosti source in the company operating in the taxi market, DiDi’s departure from Russia is due to several reasons. First, it is the low volume of investments in the Russian Federation, which does not allow to continue to work due to high competition from other players, as well as to enter the marginal market of Moscow. The situation with the planned delisting and IPO in Hong Kong shows that the company is primarily focused on its key market – China, adds the interlocutor of “Vedomosti”. Another reason, he said, could be a bill prepared by the Ministry of Transport, which will tighten the rules of operation in Russia for foreign taxi aggregators.
In the autumn of 2021, the Ministry of Transport has prepared a bill that significantly tightens the work of aggregators, it should enter into force on September 1, 2022. It establishes subsidiary liability of the aggregator and driver to the passenger for damage in an accident. for transportation, etc. In addition, foreign taxi aggregators may be obliged to coordinate the working conditions of drivers with the Russian government and report on their number. In case of non-compliance with these requirements, the service will be blocked. The requirement to agree on working conditions with the government applies only to foreign services that process more than 1 million orders per month and in which more than 50% of drivers work outside the Eurasian Economic Union (EAEU, in addition to Russia includes Kazakhstan, Belarus, Kyrgyzstan, Armenia). Analysts then noted that the bill, in the first place, could hit Didi’s service. In January 2022, RBC, citing sources, reported a reduction in the number of Didi employees in Russia.
In June 2021, the Minister of Digital Development Maksut Shadayev raised the issue of tightening the work of foreign aggregators in Russia at the St. Petersburg Economic Forum. At the same time, the Russian taxi service “Maxim” appealed to the FAS with a complaint against Didi.
Stanislav Schwagerus, head of the competence center of the International Eurasian Taxi Forum, believes that Didi’s departure from Russia is primarily due to the company’s financial problems related to delisting with the NYSE and the actions of regulators in the Chinese market. He explained that the Chinese authorities have tightened requirements for aggregators, in particular by setting limits on the amount of commissions they charge drivers and obliging taxi services to provide social and labor guarantees for workers. A number of Chinese ministries are working to further regulate the market, he added. “All this requires the company to make serious financial injections inside China,” Schwagerus told Vedomosti.
According to the expert, it is not worth linking Didi’s decision with Russian regulations. The expert reminded that in recent years four bills on regulating taxi activities have been discussed. And the issues of market regulation are still far from final, he stressed.