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SHANGHAI/BEIJING (Reuters) – China’s largest ride-hailing company Didi Chuxing has suspended its carpooling service after a passenger was killed, and is likely to face tighter oversight that will squeeze driver numbers and extend customer waiting times.
The incident, which follows a similar grisly killing by a Didi driver in May, triggered public and government backlash – and created an opening for rival services to chip away at Didi’s dominance in China, industry analysts say.
Room - Others - Market - Incidents - Weakness
“There is certainly room for others to serve the market, and such incidents expose an apparent weakness in Didi’s business model: aggressive expansion without adequate control of the integrity of the drivers on their platform,” said Bill Russo, head of Shanghai-based consultancy Automobility Ltd.
Didi founder Cheng Wei and President Jean Liu issued a lengthy and deeply apologetic letter late on Tuesday, saying “our vanity overtook our original beliefs.” It was a humbling move for a Chinese company celebrated as a homegrown “unicorn” in state media.
Company - Percent - Chinese - Ride - Share
The company controls 90 percent of the Chinese ride share market, according to a Bain report in May. Didi says it makes 10 billion trips a year.
Valued at $56 billion in a fundraising round last year, Didi is trying to expand globally and is considering a giant initial public offering as early as next year. It bought rival Uber’s China business in 2016.
Brakes - Week - Regulators - Cities - Beijing
But now it may need to tap the brakes. This week, regulators in major cities, including Beijing, Chongqing, Dongguan, Guangzhou and Shanghai, ordered company officials to suspend drivers without proper operating licenses and stop new registrations for unqualified drivers, government statements and local media said.
Tougher safety measures and driver screenings are likely, analysts said. Already, Didi says it rejects tens of thousands of unqualified driver applications every day.
Didi - Frustration - Times - Concerns
Didi had already faced mounting public frustration over waiting times and concerns that it had...
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