Manufacturing News

Apple bets $1 billion on Didi, China's top ride-hailing company

Now we know the price of access to the world's largest market: $1 billion (6.5 billion yuan) is the size of the check Apple wrote for a stake in Didi Chuxing, China's biggest ride-hailing company.

Why $1 billion, and why such a large stake, for a company that's more accustomed to smaller, lower-key investments is something for CEO Tim Cook to explain.

What's self-explanatory is that Apple is buying its way back into the market as the consumer and political winds shift.

By buying into ride-hailing, Cook seems to be thinking outside the box, recognizing that iPhones are not the only way to tap China's growing middle class. The deal may also give him some immunity from negative government or consumer sentiment, since Apple is riding the coat-tails of existing Didi investors Alibaba and Tencent.

As for the deal itself, valuations and size notwithstanding, the investment certainly makes more sense than paying three times as much for a maker of overpriced headphones.

Didi Chuxing, previously known as Didi Kuaidi, is about as sure a thing as you can get in China. Ride hailing has taken off in a way that's hard to replicate in any Western market, and Didi has Uber over a barrel.

Xiaoju Kuaizhi, the company that operates Didi, has been in the process of seeking more than $2 billion in a funding round that gives it a $25 billion valuation, Bloomberg News reported. At the same time, that $1 billion is a pittance, given that Apple has more cash than it
knows what to do with.

It may be that the iPhone maker is overpaying for the stake, but that matters little, because Apple is really buying a foundation for its future in China.

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