When Uber pulled out of China last summer, it appeared to be the end of two years of frenzied competition with the local rival Didi Chuxing.
Yet with a new funding round that has brought in $5.5 billion, it seems the Chinese firm wants to take the rivalry global.
The investment, which Didi Chuxing announced in a statement on Friday, values the company at about $50 billion, according to someone familiar with the matter, but who declined to be identified because they not authorized to speak about the details. That valuation makes it the second most valuable start-up in the world behind Uber.
The new financing could bring Didi Chuxing back into competition with Uber: Analysts expect the Chinese company to use the funds to push into new markets and to develop autonomous driving technologies.
The fund-raising efforts indicate just how valuable it can be to dominate China, an internet-savvy market with the world’s largest smartphone-using population that is nevertheless largely closed to foreign competition. Despite having done little outside China, Didi Chuxing has been able to raise almost as much money as Uber.
The investors in the new round included SoftBank in Japan and Silver Lake Kraftwerk in the United States as well as the Chinese institutions China Merchants Bank and the Bank of Communications, according to the person familiar with the matter. They join a who’s who of tech investors — including the two largest Chinese internet companies (Tencent and Alibaba) and Apple — with stakes in Didi Chuxing.
With the infusion, Didi Chuxing’s expansion will be watched closely as a signal of the ability of Chinese start-ups to expand beyond their home market.
While Chinese internet companies have innovated at home, becoming some of the largest businesses in the world, they have a mixed track record in expanding abroad.
One uncomfortable parallel for Didi Chuxing is Xiaomi. The Chinese smartphone company was once the world’s most valuable start-up, yet it has struggled with domestic competition and a mixed performance overseas.
Abroad, the company will be blazing a new trail. Although it is a member of a loose alliance of ride-sharing companies that includes the Uber rival Lyft, it has little experience breaking into new foreign markets.
Didi Chuxing was also expected to use part of the new funds to develop next-generation technologies. There, too, it faces stiff competition. Google, Uber, and the Chinese search engine Baidu all have a lead in development of autonomous driving. In March, Didi Chuxing said it was creating an artificial-intelligence lab in Silicon Valley to help it create driverless car and security technologies.