The Chinese tech giant that took on Uber in South Africa – and failed

Chinese giant DiDi burst onto South Africa’s e-hailing scene in 2021, launching with much fanfare and over R100 million worth of promotions. 

The company had signed up over 15,000 drivers across major cities, with its rollout beginning in Gqeberha and moving on to Cape Town and Johannesburg. 

However, just over a year later, the company shut down its operations in South Africa as it failed to make any inroads against Uber and Bolt. 

The two Western tech giants remain dominant in South Africa, securing over 95% of the e-hailing market and launching additional services such as food delivery and courier services. 

This is despite DiDi pouring millions of dollars and resources into South Africa, offering lower prices and quicker service. 

As it turned out, the offering of lower prices came at the expense of commission for drivers, with it offering 13% commission compared to Uber’s 25% and Bolt’s 26%. 

This made drivers reluctant to switch to the platform and, without drivers, the service had very little chance of succeeding. 

As the company’s post-launch promotions faded, so did interest from customers, who returned to more familiar apps for their e-hailing needs. 

Coupled with an inability to win customers away from Uber and Bolt, this resulted in the platform not reaching a critical mass of either drivers or riders. 

DiDi also launched in South Africa at an extraordinarily difficult time, with the effects of pandemic-era lockdowns still being felt and widespread strikes from e-hailing drivers disrupting services. 

The company’s decision to launch in the relatively small market of Gqeberha also handicapped its growth, with it failing to grab a foothold in major population centres such as Johannesburg or Cape Town. 

This spelt trouble for the Chinese giant, which planned to use South Africa as a springboard into the rest of Africa and other emerging markets. 

It had proven successful in expanding to developed economies, particularly in Asia, with it operating in 28 cities across Australia, for example. The company has over 500 million customers globally. 

However, it did not make the cut in South Africa, with DiDi shutting down its service in April 2022, just over a year after launching. 

“We have made the difficult decision to end our operation in South Africa as of 8 April. Our aim has been to ensure a smooth transition for all, and we would like to take this opportunity to thank our employees, drivers, riders and partners for the kindness and support shown to Didi,” a Didi official said. 

“We have re-evaluated where we can make the most positive impact in the short-term and are focusing on developing even deeper capabilities in other existing markets.”

Uber’s reign under threat

Uber has managed to successfully survive the launch of several competitors to its offering in recent years, with it fending off both DiDi and Bolt to remain the dominant player in South Africa’s e-hailing market. 

However, it now appears to be experiencing a perfect storm of significant regulation changes, deteriorating service quality, and increased service disruptions from drivers. 

SA Meter Taxi and E-hailing Association chairperson Sibongiseni Shange told Cape Talk that regulatory uncertainty poses a major threat to the sector. 

Not only are drivers unlikely to be able to comply with South Africa’s new e-hailing regulations, which will be imposed in three months’ time, but there is great uncertainty regarding how they will be implemented. 

“It still has to be discussed with the provincial regulations authorities to implement the law, so even the officials are still confused about how to go about it,” said Shange.

“So the 180 days, it is definitely not going to be met the way things are going. We’ve got a challenge because everyone is still learning. There have been difficulties on implementing these regulations.”

He warned that authorities already have a backlog of old operating licences, describing the process of getting a new operating licence as almost impossible.

“E-hailing has been operating using the metered taxi operating licence. Even with those operation licences, it has been a struggle to get them,” said Shange.

“To apply for the new ones, it seems impossible because you have a backlog of the old applications.”

The new regulations aim to address current loopholes in public transport requirements and some key issues that have plagued e-hailing services since their launch. 

When launching in South Africa in 2013, Uber was extremely popular, with its service proving to be in high demand in the country. 

However, in recent years, there has been increasing outrage from customers who claim the platform’s service levels have deteriorated significantly. 

Most complaints related to reckless and disrespectful drivers, customers being overcharged, and poor customer support from Uber itself. 

As a result, the new regulations force e-hailing drivers to obtain operating licences to ensure that services are authorised and safe, the Department of Transport said. 

The new regulations also aim to ensure that ride-hailing services maintain quality and security. All e-hailing vehicles must be branded or display a sign bearing the company name.

Each vehicle must also be fitted with panic buttons for the driver and passengers. It is the responsibility of vehicle owners to ensure these are installed.