In the afternoon of May 19, Cheng Wei, the chairman and CEO of Didi, issued an internal letter to all staff. Since its listing in 2021 and a series of subsequent events, Didi has not spoken in the name of Cheng Wei for a long time. The only purpose of this letter is to announce the change of its partner Liu Qing for many years.
It was mentioned in the letter that Cheng Wei decided to promote Liu Qing to the permanent partner of the company. Liu Qing will no longer be the director and president of the company, and the company will no longer have the position of president in the future. Liu Qing will continue to serve as the chief talent officer of the company, focusing on talent, organization and social responsibility, and continue to report to the chairman and CEO Cheng Wei.
According to the internal letter, Liu Qing has been promoted to permanent partner, which is nominally a promotion, but also means that he has become an internal oriented role.
In the early development stage of Didi, the online car hailing market is far less mature than it is now. In order to quickly seize the market and educate users' minds, we can only launch a price war and win the market in the form of money burning subsidies. This strategy is very successful. Didi has merged its rivals Kuaidi and Uber China. Although the challengers continue to appear later, so far, Didi still occupies the first place in China's online car hailing market. Moreover, we are used to online car hailing today, and Didi is a company that has played a decisive role.
However, the war of money burning subsidies means rapid and massive financial support, so Didi urgently needs the help of capital. Liu Qing joined Didi in 2014, which may be the first major turning point in the history of Didi. She was an investment bank and became a key role in financing and M&A of Didi in those years, helping Didi survive in the early price war.
In the past ten years, China's online car hailing has changed. On the one hand, the number of drivers is increasing, but the order growth is slowing down, and online car hailing has become a stock market; On the other hand, the converged platform with the background of automobile enterprises and the Internet has developed rapidly, with more users choosing and greater market competition. Didi needs to re-establish its strategic objectives and sort out its business lines when the overall environment and its own situation change.
The personnel adjustment in this internal letter is not only a phased summary of Didi's changes in recent years, but also indicates the beginning of a new round of changes in Didi.
Blueprint and actual combat
When receiving an exclusive interview with Wu Xiaobo in 2018, Cheng Wei said that Didi does not just rely on capital to win, it is necessary to maintain a sense of crisis and keep returning to zero. His design for Didi: an international, the world's largest one-stop travel platform; Promote new energy vehicles and supporting service system; Smart transportation and driverless driving.
The year 2023, which has just passed, is an important node in the history of Didi's development: Didi turned loss into profit for the first time. According to the financial report data of Didi, in 2023, Didi realized a total revenue of 192.4 billion yuan, a year-on-year increase of 36.6%, and a net profit of 500 million yuan. For the first time, it realized a positive annual net profit, with an adjusted EBITA loss of 2.2 billion yuan. In 2022, Didi's net loss was 23.8 billion yuan.
Cost reduction and efficiency increase are the key words of Chinese Internet companies in recent years, and Didi is no exception. In fact, as early as 2017, Cheng Wei said in an interview with Caijing, "The vast majority of the most successful companies in the world have chosen a large field, and then achieved extreme success in this field. What's the difference between too many horizontal companies and an investment company?"
However, in the following years, Didi has been expanding its business boundaries, including community group buying, car building and finance. Then the market environment changed and Didi had to shrink again.
The reason why Didi made a profit last year was not only the reduction of operating costs, but also the impact of such actions as selling the smart car business "Da Vinci" to Xiaopeng Auto.
The threshold for car building is high, which requires a lot of time and huge funds as support. And now the volume of the car building market is increasing, and some brands have been unable to sustain. For Didi at this stage, the risk return ratio of self built cars has been significantly improved.
For another example, the community group buying business Orange Heart Optimality, which was closed in 2022, once brought a loss of 20.8 billion yuan to Didi in a single quarter, and it is no longer suitable for Didi, which needs more strategic focus.
After giving up some business reasonably, Didi is also investing in some other projects. On April 7, Didi officially entered into a joint venture with GAC Ai'an, and plans to achieve mass production of Robotaxi next year.
Old business, new challenge
More importantly, Didi's actions are related to changes in the overall online car hailing environment. According to LatePost, the market share of Didi and Huaxiaozhu in the online car hailing market will rise from about 65% to about 75% in 2023, but there is still a big gap compared with the high market share of nearly 90% around 2020.
Liu Qing, who has strong financing ability, played an important role in the early development of Didi. In recognition of this 10-year partner, Cheng Wei also said in an internal letter that after Liu Qing was promoted to the permanent partner of the company, the company will no longer set up the position of president in the future. In addition, the letter wrote that Liu Qing volunteered to apply for resignation.
Cheng Wei described his relationship with Liu Qing as "cross transposition". Liu Qing manages capital, "diplomacy" and functional departments, including human resources and finance, while Cheng manages more business.
Liu Qing graduated from Peking University with a bachelor's degree in computer science and a master's degree in computer science from Harvard University. She has worked in the investment banking department and the direct investment department of Goldman Sachs for more than 10 years. At the same time, she is also the daughter of Liu Chuanzhi, the founder of Lenovo Group. With the support of these backgrounds and capabilities, one of her major tasks after joining Didi is to complete the merger of Didi Dukuai. Since then, she has led Didi's round D financing of $700 million, and also attracted Apple's $1 billion investment. These actions provided Didi with sufficient ammunition for its business development at that time. It won the subsidy war with Uber China, and then completed the acquisition of Uber China's business.
These dazzling capital actions are the basis for Didi to become the king of the market around 2020, providing the safest external environment and the most sufficient ammunition depot for Didi.
However, the current online car hailing market has long been different from that of Liu Qing when she joined ten years ago.
On the one hand, the online car hailing market is becoming more and more saturated. According to the statistics of the online car hailing supervision information interaction system, as of December 31, 2023, 6.572 million online car hailing driver licenses have been issued across the country, more than twice as many as three years ago. In terms of the number of orders, the annual average daily orders in 2023 will be 24.97 million, compared with 21 million three years ago. In other words, the growth rate of drivers is far higher than that of market orders. Since this year, many places across the country have issued online car hailing industry risk warnings.
On the other hand, the rise of aggregation platforms with the background of Internet giants and automobile enterprises is surrounding Didi. On April 29, Cao Cao Chuxing, backed by Geely, submitted a prospectus to the Hong Kong Stock Exchange. At the beginning of March, Dida Chuxing and Ruqi Chuxing also submitted a prospectus to the Hong Kong Stock Exchange. Didi has welcomed a number of new competitors.
In response, Didi chose to focus on "online car hailing" business. According to the late LatePost report, Didi said that in the next three years, it has set the daily unit volume growth goals for China's travel business: 45% in 2023, 10% - 15% annually in 2024 and 2025. However, Didi officials did not reply to the authenticity of the data.
This adjustment of Liu Qing can be said to be the result of the joint action of all these internal and external factors, as well as the inevitable choice for Didi to enter the next stage.
