Didi is axing jobs and could retreat from food delivery and bike sharing

Posted at 2:43 AM, Feb 15, 2019
and last updated 2019-02-15 07:12:25-05

China’s biggest ride-hailing firm is axing 15% of its staff and scaling back non-core businesses as it tries to get back on track following the murders of two passengers last year.

Executives at Didi Chuxing told staff members in Beijing on Friday that it plans to lay off about 2,000 employees and focus on its “core mobility business,” according to a person familiar with the company’s plans.

The cuts are a striking change of gear for Didi, a $56 billion tech startup that forced Uber out of China and has expanded beyond its main business into areas such as food delivery and financial services.

A Didi spokeswoman declined to comment on the matter.

The rethink at Didi comes after two women using its carpooling service were murdered by their drivers last year. Didi indefinitely suspended the service after the second death.

The killings sparked a fierce backlash. People took to Chinese social media to urge customers to boycott Didi, accusing it of ignoring safety concerns. Chinese regulators reportedly fined Didi executives an undisclosed amount of money and introduced tighter regulations for the ride-hailing industry’s supply of cars and drivers.

Didi’s management told staff members on Friday that it will increase investments in safety and regulatory compliance as part of the overhaul of its businesses, according to the person familiar with its plans.

Didi’s overhaul comes as China’s economic growth has cooled to its lowest level in almost three decades, hurting businesses across a wide range of industries.

Didi bought out Uber’s Chinese operations in 2016. Since then, Didi has pumped money into new businesses such as bike sharing and second-hand car trading.

Those kinds of services will now be “re-evaluated and cut back if necessary,” the person said. Didi will concentrate its resources on its ride-hailing business, safety technology and driver management.

A lot of bike-sharing businesses have run into trouble in China. After flooding cities with bicycles and offering steep discounts to customers, many startups went bust. Ofo, one of the biggest players in the industry, is on the verge of collapse after burning through billions of dollars that it raised from investors including Alibaba.

Didi employs about 13,000 people worldwide. Beyond China, it operates ride-hailing services in Australia, Brazil, Japan and Mexico, and has partnerships with seven other international ride-hailing companies, including Uber’s main US rival, Lyft.