China's Didi suspends Europe expansion plans over data concerns

The ride-hailing company had considered extending services to the UK, France and Germany in the first half of this year

Didi Global has suspended plans to expand in Europe partly because of concerns over how the Chinese ride-hailing company handles passenger data.

Plans to challenge Uber in Europe, including several British cities, have been tabled and some jobs will be cut. The European expansion will be paused for at least a year, according to the Telegraph, which earlier reported the news of the suspension.

“We have established an international talent hub in the UK, recognising the exceptional quality of people in the market,” a company representative said. “Beyond that, any personnel matters remain strictly confidential.”

The Didi representative also said that the company will “continue to explore additional new markets”, and had recently launched services in South Africa, Ecuador and Kazakhstan.

The Chinese transport company had initially considered extending its services to European markets such as the UK, France and Germany during the first half of this year, Bloomberg reported in February.

At the time, the company was hiring locally and setting up a team dedicated to Europe, they said.

News that the company, which is dominant in China, might be expanding sent shares of potential rivals such as Uber and Berlin-based Delivery Hero lower.

Didi began offering car-hailing services in Russia last year, marking its first direct foray into Europe, and it is already an investor in Estonia-based Bolt Technology OU.

But since then, China's regulators began clamping down on ride-hailing fees.

The new restrictions could cut Didi’s margin in the business in half and “accelerate an exit from unprofitable international markets where it faces unrelenting competition in ride sharing”, Bloomberg Intelligence analysts wrote in a report.

“Didi’s position internationally in markets such as Australia and Europe is fairly weak while marketing costs to acquire users from rivals may sustain hefty losses. With much smaller domestic profits to offset international losses, Didi may need to rethink its international strategy,” said the analysts, Matthew Kanterman and Tiffany Tam.

Last month, Didi said it would halt registration of new users during a Chinese government review into its cyber security practices. The Cyberspace Administration of China said the move is to prevent data security risks and protect national security and the public interest.

In an article in the Times earlier this month, UK MPs had also called for Didi’s expansion into the country to be closely monitored over concerns that China could have access to local user data.

Updated: August 24th 2021, 7:16 AM
EDITOR'S PICKS
NEWSLETTERS