Apple Inc. (NASDAQ:AAPL) decided to invest $1 billion in China’s Didi Chuxing, a ride-hailing service that has a bigger market share than Uber in the country. The investment was the largest ever received by the Chinese company.
Didi Chuxing completes more than 11 million rides per day. It dominated the private car-hailing market in China with 87% share.
Apple closed the deal in “lightning speed”
The deal was struck 22 days after Jean Liu, the president of Didi Chuxing visited Apple CEO Tim Cook at the company’s headquarter’s in Cupertino, California on April 20. At the time, Liu told Cook that any company named after a fruit “could achieve something big.” According to her, the legal name of Didi Chuxing is Xiaoju Kuaizhi Inc., which means “little orange.” Liu also discussed the China market and opportunities for cooperation between Apple and her company.
Liu was a former banker at Goldman Sachs Group (NYSE:GS). She regularly meets with executives in the tech industry whenever she visits the United States. She is the daughter of Liu Chuanzhi, the founder of Lenovo Group (HKG:0992), who is politically connected in China.
“The whole deal closed in lightning speed. We were very impressed by Tim. He’s an amazing, iconic leader,” said Liu.
Apple remains confident in China’s economy
According to Cook they saw opportunities in Didi Chuxing and would help Apple better understand the Chinese market, which is critical for its growth momentum.
Cook 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. Of course, we believe it will deliver a strong return for our invested capital over time as well.”
He added, that the transaction “reflects our excitement about their growing business and also our continued confidence in the long term in China’s economy,”
Cook also stated that they remained focused on developing in-car experience through its CarPlay system, which connects smartphones to the infotainment systems of vehicles.
“That is what we do today in the car business, so we will have to see what the future holds,” he said.
Relationship with China
Some analysts suggested that the iPhone maker’s investment in Didi Chuxing is part of its strategy to strengthen its relationship with the Chinese government, which recently shut down its mobile entertainment services.
Ben Bajarin, an analyst at Creative Strategies said, “This is as much about sending signals about their seriousness in that country as it is about helping Didi build a ride-sharing platform.”
It was reported that Cook is scheduled to go to Beijing to meet with senior government and Communist Party leaders including those in charge of propaganda. Investors have been concern regarding China’s attitude towards Apple.
Li u said, “There’s a lot of things we can work on together,” when asked if Didi Chuxing would help Apple boost its relationship with the Chinese government.