Apple announced on Thursday that it has invested $1 billion in Chinese ride-hailing service Didi Chuxing, giving the start-up a major boost against its chief rival Uber in the country. As for Apple, the deal could help the tech giant gain a better understanding of the Chinese market, where its sales have suffered at the hands of outpacing rivals.
Apple's investment marks the single largest investment for Didi Chuxing, the company was quoted as saying by PTI. The investment does not grant the Cupertino tech giant a seat on the board, but Apple joins the group of strategic investors that include Alibaba Group, SoftBank, Beijing Automotive, Ping An Insurance Group, Tencent, Tiger Global Management, Coature Management and D.E. Shaw, Fortune reported.
"The endorsement from Apple is an enormous encouragement and inspiration for our four-year-old company," Cheng Wei, founder and CEO of Didi, said in a statement. "Didi will work hard with our drivers, riders and global partners, to make available to every citizen flexible and reliable mobility choices, and help cities solve transportation, environmental and employment challenges."
Apple's $1 billion in China's largest ride-hailing app is comparatively a fraction of its cash holdings of $233 billion. But China is a key market for Apple as it is the second largest market for iPhones.
"We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market," Apple CEO Tim Cook said during an interview with Reuters on Thursday. "Of course, we believe it will deliver a strong return for our invested capital over time as well."
Apple's investment is a part of Didi's ongoing fundraising round, which is expected to raise a total of $2 billion at a valuation of around $25 billion. Didi has nearly 300 million active users on its platform and offers services in over 400 Chinese cities, and completes over 11 million rides a day, PTI reported. Didi is reportedly used by more than 14 million Chinese car-owners and drivers, which gives the cab hailing service over 87 percent market share in private car-hailing and over 99 percent in taxi-hailing in China.
Didi has marked its presence outside China through investments in similar services such as Lyft in the U.S., Grab in Southeast Asia and Ola in India.