China’s largest ride-related firm is planning to ax around 15% of its staff in the aftermath of the violence and the murder of the two passengers.
The company’s executives said that they were expecting to lay off employees and put their focus on core mobility business.
These possible changes would mean a drastic change for Didi that forced Uber out of competition from China. It is a well-rooted startup that has extended its stronghold into financial services and food delivery as well.
The turning point came when its drivers in 2018 murdered two lady passengers of Didi’s taxi. Didi was forced to suspend the services indefinitely after the second murder incident.
The event causes huge aggression towards the company from the public. Social media was flooded with fury against the company and accused them of being careless towards the basic security needs of women. Many of them urged the fellow Chinese to boycott their services. Later, Chinese authorities fined Didi an unknown amount and imposed strenuous regulations in the ride-hailing industry regarding the supply of drivers and cars.
The company drove Uber Technologies Inc. out of China in 2016, and it was looking to dominate China’s ride-hailing market with the current momentum. In the meanwhile, it had also tried to consolidate itself by trying its hands in bike-sharing to payments as well as overseas markets. Ever since the controversy sparked off after the murder of the two girls, the growth has been pushed aside, and safety has become an important aspect. The world’s third most valuable startup also saw off the completion from of Meituan Dianping within China’s markets.
Although it plans a cut back of employee numbers, it is also planning to add 2500 members to concentrate on international plans to expand its business in safety and product engineering. This would mean that the company’s headcount would be the same as it had in 2018, i.e., 13,000.
Didi had reported a loss of over RMB 10 billion in the fiscal year 2018 before its woes began with the murder incident. This triggered a series of actions against the company completing the bad time for the upcoming giant.
Regulating authorities began a serious crackdown on the types of cars allowed to be enrolled on the company’s platform. This caused the number of cars to reduce, which, in turn, increases the waiting time. This caused wide inconvenience and this time was used by the rival companies to make competitive moves against new companies.
The plight of Didi underscores the state of startups in China. The problem of capitals soon drying up and companies having to face the cooling Chinese economy is a matter to be sorted in the coming days.