Apple invests $1 billion in Chinese ride-hailing service Didi Chuxing

“Apple Inc. said on Thursday it has invested $1 billion in Chinese ride-hailing service Didi Chuxing, a move that Apple Chief Executive Tim Cook said would help the company better understand the critical Chinese market,” Julia Love reports for Reuters.

“The investment comes as Apple is trying to reinvigorate sales in China, its second-largest market,” Love reports. “Apple recently has come under pressure from Chinese regulators, with its online book and film services shut down last month, and Cook is traveling to the country this month.”

“The investment gives Apple, which has hired dozens of automotive experts over the past year, a sizeable stake in Uber Technologies Inc’s chief rival in China. Cook said in an interview that he sees opportunities for Apple and Didi Chuxing to collaborate in the future,” Love reports. “‘We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,’ he said. ‘Of course, we believe it will deliver a strong return for our invested capital over time as well.’ … Didi Chuxing, formerly known as Didi Kuaidi, said in a statement that the funding from Apple was the single largest investment it has ever received. ”

Read more in the full article here.

MacDailyNews Take: Don’t be surprised when this $1 billion donation, er… investment in this convenient cover story, er… Chinese ride hailing company results in sales of Apple’s iTunes movies and iBooks being turned back on in China.

SEE ALSO:
Apple’s battle with China offers a stark reminder of geopolitical risks – May 11, 2016
Apple’s Tim Cook to visit China for high-level government meetings later this month – May 6, 2016
Apple CEO Cook ‘pretty confident’ of soon resuming movie and book sales in China – May 3, 2016
China’s increasing censorship hits Apple, but Apple might punch back – April 22, 2016
China shutters Apple’s online book and movie services – April 22, 2016

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19 Comments

  1. I totally agree with MDN’s assessment. This is Apple simply paying the piper to do business over there. The Chinese govt probably suggested something like, well, Tim, you know we look favorably on those companies willing to invest in China…

    That being said, to invest in the Uber equivalent in China probably will pay off and generate a net gain for Apple.

  2. Steve Jobs liked to use that Gretzky quote of skating to where the puck will be.

    This could also be a case of that philosophy in play: Tim Cook playing for the long term.

    If Apple does introduce an autonomous car, this would give it a huge leg up in the world’s largest market. Also, this can be a way to collect all types of data regarding cars and their use.

    The tendency is to snicker at this deal with regards to Apple learning much regarding smartphones, tablets, etc…I know I did just that. I still have my suspicions…but again, this deal makes more sense if you factor in the idea of Apple producing a car one day in the not too distant future.

    1. Nice to see someone who gets it. With increasing autonomy in cars generally and obviously some element (even if the whole thing is overblown) increasingly in any Apple efforts the best way to run such a system would be where this company has developing expertise. This would be to have all such cars owned by a third party (be it Apple or more likely an intermediary of some nature) and called upon and used as, and where, required certainly in urban environments anyway. Only then can an acceptable level of maintenance be assured and the insurance question be less complex. Updating of the technology and engineering can be methodical too. Not only can a company like this provide the experience Apple will need but the promise that they could play a role outside of their home market and compete directly with Uber would be very tempting for them even if its a long time down the road.

  3. The apple building a car rumor, now $1B USD invested in a transportation company that happens to be in a very business friendly country. Interesting.

    1. Could be that Apple soon has factories in China making affordable iCars! That would balance out the iPhone production that President Trump wants Apple to relocate in the U.S., raising their costs and reducing their profit margins to the miniscule levels of Android phones. With the iCar, though, smartphone margins or market saturation will hardly matter as Apple becomes Wall Street’s darling for a second time, by disrupting the transportation market. it will take another four years before Trump starts demanding that Apple build their damn cars in the good old U.S.A. And by then, Apple is off to the Next Big Thing.

      1. And Foxconn is building a $10B plant in India. Maybe they will be building the Apple Car in India, or moving the iPhone production to India and building the Apple Car in China. Apparently, the plant will go online in 18 months, and if the Apple Car is in play then it could be ready at that time. Maybe Musk was informed about this and decided to accelerate the mass production of Tesla Model 3 by about two years.

        1. Foxxcon does not build cars. They are building a factory in India because India’s National Manufacturing Policy makes it very difficult to import high value products like electronics. This is part of the reason why Apple has had a hard time here, and has so far not even been able to get permits for an Apple Store, as their products are not domestically made.

          However, China has tons of companies that can build cars. I think the best of the Chinese companies is Geely, as they picked up a lot of tech from their purchase of Volvo in 2010. I’ve been in a few of the Chinese built Volvo’s and they are really nice. Otherwise Tim could call up Warren Buffett and see if they could team up with BYD (Berkshire Hathaway owns a big piece), as BYD is not only strong in electric vehicles and battery tech already, they also have a strong solar power division.

    1. The decline in stock is for a number of reasons, you may want to look into:
      1) Saudia Arabia are selling US assets of upto $1 trillion, China is dumping buying dollars most central Banks are buying gold not dollars
      2) The big 5 US banks have exposure to $250 Trillion of dirivative exposure!!!! The total GDP of the world is $78 Trillion as example

      1. Dollar moves are mostly irrelevant for AAPL right now. If anything, expected dollar strength would actually increase the appeal of US assets as foreign investors would gain on currency valuation in addition any asset gains. Net derivative exposure for then banks is much less than $250T, as many of the positions offset (there are hedges going both ways). The most exposed bank in any case is Germany’s Deutsche Bank, which is a potential problem for the Euro. In any case, pretty much every banking system (US, Europe, China) can be wiped out by a black swan event the system hasn’t accurately priced in risk for. Whether that number is 2x the size of the economy or 200x, either way the system is insolvent and everyone goes broke.

        I think that a lot of the selling the last 6 months has been from the oil country sovereign wealth funds. They all need to repatriate money to offset their low oil price induced deficits. Based on AAPLs market cap, they all were large holders. This selling pressure will not go away until oil prices rise again.

        Also, there are quite a few hedge funds that will just suck it up and take a loss on their position at this point. They can buy again in a few quarters if they feel there is an upside and book the gain off a much lower cost basis.

        For any long term investor, the next few months is time to “back up the truck”. Unless something totally unexpected is unveiled at WWDC, there is no rush to buy. The institutional investors will not be back into AAPL until there is positive momentum on the top and bottom line at Apple.

  4. Seriously this is utter stupidity on Apples part, If apple really has to indulge in such kind of back door investments on products that are no way related to their core product line, to be allowed to do business in a country then they have absolutely no confidence in their products being awesome in future.
    This is the company that did not want to buy wake for a billion dollars, not buy here for 3 billion but invested 3 billion in a stupid product called Beats and made a some questionable individuals billionaires, I think it is time to kick Tim cook to the curb and get some one who is passionate about the products Apple develops instead of being a tree side peddler.

    1. Regardless of what one thinks of Beats, the company was very profitable, and no doubt Beats headphones continue to be a very profitable business for Apple. It also raises their brand value in the music industry, which is very important to Apple.

      No problems at all with Apple buying Beats. Smart business move.

      As to buying Waze, who knows if it made sense. I mean people can just download Waze app onto their iPhones anyway…so people can get Waze functionality without Apple paying 1 billion dollars.

  5. Screw Uber and Lyft. Frankly they need more competition and they act like mafia thugs. I got to witness their bs tactic play out here in Austin where they called a vote since they didn’t want to be subjected to fingerprint checks for drivers. When they lost the election, they immediately turned off service in Austin screwing over their own drivers and customers even though they could of kept operating until 2017. Spoiled brats and bring on more competitors.

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