In a few Whatsapp groups of tech/startup practitioners and aficionados, people have been sharing about this potentially big threat to Didi – T3.

If you have not heard about it (and/or wondering what the heck it is), read the following TechCrunch story:

Alibaba, Tencent and other major names form $1.45B ride-hailing venture

The story gathered more attention in English than in Chinese. We know that anything that has the backing of Alibaba and Tencent will fare well in the news – however, it is also important to understand what is behind the news.

And we think T3 is more of a defensive move (and to certain extent PR), without any material threat to Didi:

  1. T3 is led by three state-owned car manufacturers. We think for them this is more of a bargaining chip they want to build to gain a better negotiating position when working with Didi, rather than wanting to challenge Didi.
  2. Alibaba and Tencent are only small minority stakeholders – for them this is probably more of a political stance rather than financial or strategic investment
  3. As a loose alliance – operational wise it will be challenging, and we believe the partners know about it.
  4. It started in the city of Nanjing with 5000 cars – a smaller fleet than many taxi companies in China.
  5. Also, the alliance was actually formed last year. What they did recently is a press release introducing more partners and stakeholders.

Many will continue to challenge Didi, for various strategic reasons. And Didi will still dominate, and it is only up to Didi itself to find a way to justify its valuation and eventually IPO.



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