DiDi taxi entering the Russian market


RBK News has recently reported that DiDi Chuxing, the largest Chinese car-sharing and taxi network plans to open offices throughout Russia, including in St. Petersburg. Now the company is selecting the head and employees of the division in the local market.
According to the forecasts of HSBC Bank, the Russian taxi market is the most profitable in the world. HSBC Bank analysts note that taxi services in Russia can afford to set lower prices compared to other countries thanks to a broad audience.
Even though in the Russian regions there are a lot of small companies and a lot of taxi parks, Yandex.Taxi and Citimobil continue to squeeze out smaller taxi companies from the transportation market gradually. Regional taxi fleets cannot resist globalization and competition from the giants of the taxi market - there is no desire, no initiative, no money.
Due to the aforementioned circumstances, previously, only one company could constitute a severe threat and competition - Uber. Russian providers saw him as a strong competitor and therefore bought it.
However, very soon in Russia, the Chinese taxi aggregator DiDi, owned by the multinational Alibaba corporation, which runs the online giant Aliexpress, will start operating. The Alibaba Group launched the online taxi booking service Didi Chuxing back in 2012, and all this time, the company developed exclusively inside China. For the last eight years, the Chinese company has been hugely successful in its domestic market - now DiDi is the most significant "local" car-sharing and taxi service. In 2016, DiDi squeezed out Uber from China. DiDi is six times larger than Yandex - 62 billion dollars of capitalization against Yandex's 11 billion.
Soon, Yandex will be able to experience all the charms of globalization and the fierce competition with a much larger player in the market. Now Alibaba and the DiDi online service will try to win part of the taxi market from Yandex. DiDi has been able to squeeze Uber out of the Chinese market thanks to two key strategies - dumping of prices in the market and car delivery time. However, lowering prices even further in the Russian market can be dangerous — Russian taxi drivers connected to the Yandex.Taxi system always complain about low tariffs, due to which Yandex.Taxi successfully competes with other companies in Russia. A collapse in tariffs may lead to the FAS intervening in the market. The Antimonopoly Service, however, has more than once addressed the cost of travel advertised by aggregators.
On the other hand, the appearance of the new significant 'player' on the Russian market might turn out to be a positive intervention into the stale market and shake the 'comfortably-settled' Russian taxi providers to become more competitive in order to retain not only its consumers but also employees.
How much a taxi market change in Russia, after the Chinese enter the market, only time will tell.