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China’s Didi touts tech spending ahead of Wall St debut

by Mary Sewell

BEIJING — Chinese ride-hailing service Didi says it lost $5.5 billion over the past three years ahead of its U.S. stock market debut Wednesday. Still, it’s highlighting its global reach and investments in developing electric and self-driving cars.

The Beijing-headquartered company operates in 16 countries, but almost 90% of the 493 million customers who used the service at least once in the past year are in China.

Didi Global Inc. planned to raise up to $4 billion by selling 288 million shares on the New York Stock Exchange at $13-$14 each. It said 30% will be spent on technology development, another 30% to expand outside China, and 20% on new products.

The company was founded in 2012 by Will Wei Cheng, a veteran of e-commerce giant Alibaba Group, says it aims to become the “world’s largest one-stop transportation platform” and operator of vehicle networks.

“We aspire to become a truly global technology company,” said Cheng and president Jean Qing Liu in the prospectus. Liu is a former Goldman Sachs managing director and Liu Chuanzhi, founder of computer maker Lenovo Group. Early investors included Apple Inc., Japan’s Softbank, Alibaba and Chinese internet giants, Tencent Holding Ltd., and Baidu Inc.

Didi acquired rival Kuaidi in 2016 and Uber Technologies Inc.’s China operation the following year, ending a battle in which the American company said it was losing $1 billion a year.

China’s populous ride-hailing market has gone through abrupt changes as the ruling Communist Party tries to nurture technology development while keeping control of promising industries.

Founded as a smartphone-based taxi-hailing service, it launched ride-hailing in 2014 and expanded abroad in 2018 by acquiring Brazil’s 99 Taxis and setting up operations in Mexico.

In 2015-16, regulators tightened control in what state media said was an effort to curb traffic congestion and prevent crime linked to ride-hailing services. Drivers were required to be residents of cities and towns where they worked and be more closely supervised.

Didi has plowed money into the development of self-driving, electric vehicles, and other technology. The company launched an electric car last year with Chinese automaker BYD Auto, a unit of BYD Ltd.

Didi lost 15 billion yuan ($2.3 billion) in 2018, 9.7 billion yuan ($1.5 billion) in 2019, and 10.6 billion yuan ($1.6 billion) last year, according to its prospectus. It says Didi had $3 billion in cash as of Dec. 31.

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