Milestone for Chinese ride-hailing giant shows disruptive tech driving change in Latin America

China’s ride-hailing giant Didi Chuxing has arrived at a billion-ride milestone in Brazil and also made inroads in Colombia, a market where its US competitor Uber ran into speed bumps.

Didi, which has more than 550 million users across Latin America, Asia and Oceania, expanded to Brazil in January 2017 when it acquired 99, a local ride-hailing company. Since then, Didi has emerged as the most popular ride-hailing app in the country, which accounts for about 10 percent of trips provided by the company globally.

At the end of January, Didi announced it had provided a billion rides there. This translates into billions of kilometers driven, millions of liters of fuel, and millions of hours of service — all helping to support the economy.

However, car sales have fallen, and people are also using cars less as ride-hailing apps become more popular, said Andre Jalonetsky, director of communications and institutional affairs at Brazil’s National Association of Vehicle Manufacturers.

“Brazil is the largest ride-hailing market in Latin America,” said Didi in a release. “Today, 99 works with over 600,000 partner drivers, with about 18 percent of them women, to serve 18 million passengers in more than 1,600 cities.”

Like many other countries in the region, Brazil must work to ensure the industry continues to thrive. This includes improving roads and highways, connectivity, and regulations that govern ride-hailing apps. The challenges are significant and require apps to successfully adapt their business models.

This is no easy task, as Uber’s experience in neighboring Colombia suggests. 

A big concern in Colombia is the fierce opposition from taxi guilds. Uber left the country on Jan 31, following a judicial decision that aimed to block the app. Most of its drivers and passengers shifted onto competing apps like Didi, which entered the country in July 2019. 

Colombia has been struggling to create a regulatory framework for ride-hailing apps, and competition has been intense. 

Uber returned to Colombia after 20 days with a new business model. On Feb 20, the company said it would once again operate in Colombia under a temporary “car rental service with driver included” model. This circumvented a decision by the Superintendence of Industry and Commerce, a consumer rights watchdog, which prohibits the use of private cars for public transportation.

“The current model is temporary because Uber had to find a way to adapt to reduce the damage caused by the (regulation),” the company said in a statement to China Daily. 

Uber said there are more than 135 jurisdictions around the world with collaborative mobility regulations that Colombia could use as a model.

“Uber reiterates its commitment to the country and the community and wants to maintain an open dialogue with the Colombian authorities,” it added.

Olivero Garcia, president of Colombia’s National Association of Sustainable Mobility, said technological advances undoubtedly present challenges.

“Not only are we talking about ride-hailing apps, but digital media and the internet have changed the traditional business structure and it is not logical to try to regulate these platforms on previous traditional business models,” he said.

“These are technological developments that offer competitive advantages over traditional transportation methods, and these are the ones that promote competition and develop economies,” Garcia said. “Hopefully the government will quickly regulate this matter.” 

For its part, Didi continues to successfully operate in Colombia even as the government works to regulate the industry.

According to Priori Data, an app data service provider, Didi is the most downloaded transportation app in Colombia, while Uber came in sixth.

Gabriel Santos, a member of Colombia’s Congress, told China Daily: “We are introducing initiatives at Congress that allow the coexistence of new technological developments in the field of ride-hailing.”

Such moves will not necessarily detract from the transport sector but will create more competition in the market, to the benefit of users, he added.

In Brazil, Didi’s success is backed by user feedback. The company’s Brazilian subsidiary 99 is that country’s most downloaded ride-hailing app, and according to analytics service Appfigures, 99 has been consistently rated five stars by more than 88 percent of some 1.2 million users polled.

This success comes despite intense competition. There are more than 250 transportation-related apps in Brazil, including Uber. The US company received about one-fourth as many reviews, with just over 81 percent of them being five stars.

Didi’s success in Brazil underscores the way ride-hailing apps have spread throughout Latin America and how disruptive technology is changing the way people live. But infrastructure needs to be adapted also.

The shifts are visible across multiple sectors. Parking lots are altering their business models to offer “pit stops” and garages for ride-hailing drivers, while the need for high-speed internet access and the deployment of 5G networks are also part of the conversation around ride-hailing apps and the future of transportation in Brazil and elsewhere in Latin America.

“The future requires Brazil to have no blind spots for cell phone signals,” said Jalonetsky. “Nowadays there are parts of the country in which even 3G signals are not available, and we need to have the 5G technology available to prepare the country for the future.”

The writer is a freelance journalist for China Daily.