Apple made a huge investment of $1 billion in Chinese ride-hailing service Didi Chuxing, reports Reuters. Revealing the investment on Thursday, CEO Tim Cook said he hopes this move will help the company get a better understanding of the Chinese market.
Apple again bets on China
Apple has a stake in two burgeoning waves of technology — the sharing economy and car technology — with this rare investment. China is a major market for Apple, and it is trying to reinvigorate sales in the region. Regulators in China are putting immense pressure on the company, and Cook is expected to visit the country this month.
With this investment, Apple is now aligned with Uber’s chief rival in China at a time when automakers and technology companies are forging new alliances and making cross-investments. For example, General Motors recently bought Cruise Automation, an autonomous driving technology company. It has taken a stake in the U.S. ride-sharing company Lyft as well.
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In an interview with Reuters, Cook said collaboration opportunities exist for Apple and Didi Chuxing in the future.
“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,” the CEO said.
Diversifying revenue streams
Apple might want to diversify its business as iPhone sales mature, and this deal offers a glimpse into its plans. Analyst Patrick Moorhead of Moor Insights and Strategy said the iPhone maker has emphasized its growing revenue from services such as Apple Music and mobile payment platform Apple Pay, and the investment in the ride-sharing company appears to reinforce this.
Investors are eager to know if the U.S. firm will enter the automotive business. Citing unnamed sources, Reuters said the iPhone maker has hired a wide range of automotive experts and is exploring building a self-driving car. The margins that the company reaps on the iPhone are higher than those most automakers make, but this investment indicates that the tech giant is considering offering transportation services that could be more lucrative.
Apple’s funding is the single largest investment that Didi Chuxing — formerly known as Didi Kuaidi — has received, stated the ride-hailing service company. Didi Chuxing dominates the Chinese ride-sharing market and has raised several billion dollars in the past. The company says it completes 11 million rides a day and accounts for more than 87% of the market for private car hailing in China.