Apple Inc announces investment worth $1 billion in China’s ride-hailing service, Didi Chuxing. The tech giant’s Chief Executive Tim Cook aimed for the move to aid the company in better understanding critic in the Chinese market.
With the company’s rare investment move, the two expanding technology – the sharing economy and car technology were given a stake. In addition, generated profits fueled by the iPhone business begun maturing.
Meanwhile, the company tries to restore sales in China, citing greater pressure from authorities, and Cook will travel to China this month.
Apple aligns with China’s chief rival, Uber Technologies, Inc, as car makers and technology firms forge new alliances and cross investments were made. For instance, General Motors acquired autonomous driving technology firm Cruise Automation, and a stake was taken in U.S. ride-sharing firm Lyft as well.
Cook mentioned that there are opportunities for Apple and Didi Chuxing to work together in the future.
"We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market," Cook said.
"Of course, we believe it will deliver a strong return for our invested capital over time as well," he added.
Didi Chuxing was previously known as Didi Kuaidi, and Apple investment is considered as its single largest it has ever acquired, according to its statement. The company was previously funded with several billions of dollars, ruling the ride-sharing market in the country. It generates over 11 million rides in a day, with more than 87 percent of the market for private car-hailing in the country.
Investors Eyes Apple
The deal offers an indication of how Apple may expand its business as iPhone sales level is off. The company highlighted its growing revenue from services like Apple Music and mobile payment Apple Pay, suggesting a move that reinforces the ride-sharing investment, according to Moor Insights & Strategy’s analyst Patrick Moorhead.
"After all the hints about the service business and what they would like to do in the future, it’s all starting to fit together," Moorhead said.
Hence, investors are closely watching the Apple Inc if its next step is to enter the automotive business. The company has recruited automotive experts, and the company explores structuring the self-driving car, according to a source.