Apple announced yesterday that it is investing $1 billion in Didi Chuxing, a privately held ride sharing company and competitor to Uber-China that provides vehicles and taxis for hire in China via smartphone applications.
After Apple reported disappointing 2nd quarter earnings last month that showed maturing smartphone growth and weaker Greater China sales which fell 26 percent year over year, the company is trying to secure a strong foothold in the world’s second largest economy despite facing tougher Chinese regulations with its iTunes store related to selling books and movies and ahead of a meeting later this month in China between Apple CEO Tim Cook and Chinese officials.
“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,” CEO Tim Cook told Reuters who first broke the story.
“Of course, we believe it will deliver a strong return for our invested capital over time as well” Cook added.
The $1 billion investment by Apple is a drop in the bucket of its $ 233 cash pile and represents the largest investment since its 2014 acquisition of Beats.
Didi was founded in June 2012 and grew stronger from the 2015 merger of rival firms Didi Dache and Kuaidi Dache.
Didi is financially backed by the two largest Chinese Internet firms, Tencent and Alibaba, which have vested interests in th electronic payment services on the Didi app.
Didi is valued at approximately $20 billion as of February 2016 while its main competitor Uber China is valued at $ 8 billion.