In Mexico, Uber Can Expect to Compete with China’s Didi Chuxing - Techfunnel

In Mexico, Uber Can Expect to Compete with China’s Didi Chuxing

In Mexico, Uber Can Expect to Compete with China’s Didi Chuxing

Didi Chuxing is closing the gap with Uber and setting foot in North America with operations in Mexico by the first Quarter of 2018, according to reports first published by Reuters. This not Didi’s first move into the continent. The Chinese company opened a R&D center in Mountain View, California earlier this year, and has invested in Brazil’s Uber competitor, 99. His operation in Mexico could be the first competition for Uber.

According to Reuters, Didi has started searching for executives and initiated talks with government officials. “About a month ago, Didi met with ProMexico, a government trade and investment body, to discuss opportunities in the country, according to a Mexican official, who declined to provide further details about the conversations,” Reuters reports.

With a $5.5 billion increas in funding last April, Didi Chuxing reached a valuation of $50 billion, second to Uber’s $68.5 billion, becoming the second-most valuable privately-owned company in the world. The funding gave the company the deep pockets it needed to expand globally.

In Mexico, Didi will meet a market in search of consolidation, after a year when Cabify faced outrage after one of its drivers was found guilty of murdering of young woman kidnapped during a ride. The Mexican ride-hailing market is facing the treat of government regulation in key states like, where companies have to comply with a statewide tax per ride and other regulations that may damage the profitability of the business model.

Currently, Uber enjoys a dominant share of the Mexican market with 7 million users per month in 45 cities, but the plans of Didi will dictate the viability of local endeavors like City Drive, Easy Tax, and apps for local cab unions. Mexico City is Uber’s third-biggest market in the world by rides, after the Brazilian cities of Sao Paulo and Rio de Janeiro.

Beyond the point of saturation due to the large portion of the “unbanked” Mexican market, Didi could find room to grow if takes cash payments from day one.

In some cities, like the tourist port of Cancún (south), however, local authorities are working on regulations that even Uber is fighting because they could put them out of market. One of those regulations attack cash payments because, they argue, they put ride-hailing apps in direct competition with traditional taxis. Didi is performing 25 million rides a day after buying Uber’s business in China, but the San Francisco-based company owns 20% of his Chinese competitor. The success or failure of Didi in the proxy market of Mexico will determinate the future steps of the competition.

Marco Islas
Marco Islas
Journalist with 15 years of experience covering the verge between culture, tech and business lives in the Mexico Silicon Valley witnessing his bloom.

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