Apple Invests $1 Billion In Chinese Ride-Hailing Company Didi Chuxing | KERA News

Apple Invests $1 Billion In Chinese Ride-Hailing Company Didi Chuxing

May 13, 2016
Originally published on May 16, 2016 12:50 pm
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ROBERT SIEGEL, HOST:

You might not think of Apple and Uber as rivals, but they are now. Apple has decided to invest a billion dollars in a Chinese ride-hailing service called Didi Chuxing. It's a lot of money and a notable departure from Apple's typical MO, as NPR's Aarti Shahani reports.

AARTI SHAHANI, BYLINE: This is a very interesting union of brands. In China, Apple, whose iPhone costs upwards of $600, is a luxury brand.

ANTHONY KUHN, BYLINE: Apple is definitely seen as a status symbol, a prestige purchase for a lot of people.

SHAHANI: That's Anthony Kuhn, NPR correspondent in Beijing.

KUHN: It's at the high end of the market.

SHAHANI: Didi, a ride-hailing service launched in 2012, has a different brand reputation. Yes, like Uber, Didi has a high-end black-car service, but Kuhn says, Didi is far more popular than Uber among everyday middle-class consumers in China.

KUHN: They're basically just seen as everywhere, you know? It's very much a people's choice

SHAHANI: And that is why it makes sense for a U.S. company trying to curry favor in the People's Republic of China to invest in this local business. Apple hasn't made this type of investment before. Back in 2014, it did spend $3 billion to acquire Beats, the music company headquartered in Southern California. But according to Patrick Moorhead, an analyst who's followed Apple for two decades, that move didn't seem so far afield.

PATRICK MOORHEAD: Beats was an acquisition that fit right into what they did, which was crank out high-quality products

SHAHANI: Apple was already in the music business. It was easy to see the synergy. With Didi...

MOORHEAD: This one is more difficult.

SHAHANI: It's not music or hardware. It's basically a taxi ride. Of course, iPhone sales have slumped in China, and Apple needs to find new ways to make money there. Moorhead says there's a lot the two companies might do together. For example, Didi may start using Apple Pay instead of other very popular payment services like WeChat. Didi drivers may start to stream iTunes for in-car entertainment. Whatever the short-term play, the bigger point, Moorhead says, is that by investing in the Chinese startup, Apple is paying its respects to that market.

MOORHEAD: As a foreign company, if you're big enough, China expects you to make big investments in the country for the right to do business there.

SHAHANI: It's not something in writing. It's just expectation. Moorhead points out that, recently, China decided to ban iTunes movies and iBooks. If Apple spends more money in China, that could help smooth over such misunderstandings in the future.

MOORHEAD: Yes. And miraculously, it's better, he said with sarcasm (laughter).

SHAHANI: Didi is valued at about $20 billion and serves hundreds of cities throughout China. Aarti Shahani, NPR News.

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