Why you should care
China’s online businesses are leading the nation in raw capitalism.
Each and every day, when Joe Lee is working in Shanghai, his assistant orders the same meal for lunch from the Shinwang Restaurant: fanqie jidan, or scrambled egg with tomato. For dinner? Just a few veggies. “I try to cut down on carbs, and I go to sleep early,” says the company’s chief strategy officer. Remarkably simple tastes for a senior executive behind one of the fastest growing companies in the world — China’s multibillion-dollar taxi-hailing behemoth, Didi Kuaidi. But maybe that’s his secret for success.
Roll over Uber. Lee’s plan for Didi Kuaidi, founded just three years ago, has focused on merging, growing and then more of each, as the company scales at a breakneck pace. And his minimalist routine, which Lee says yields better rest and keeps down his BMI, has helped him stay fit as he races to keep up with Didi Kuaidi’s explosive growth, which often has him living apart from his Hong Kong family while visiting three Chinese cities a week. So far, the plan seems to be working: Uber may be the most famous car-calling business in the world, but Didi Kuaidi — especially after the merger of Kuaidi with rival Didi Dache — claims to be the biggest, with some 11 million bookings a day (according to the company), many times Uber’s total volume. (Uber, which does not regularly disclose the volume of its business, said in December it was booking 1 million rides a day.)
Unlike Uber, Kuaidi’s app allows for booking in advance, and payment is via China’s biggest system, Alipay.
It may seem that Lee is helping to navigate just another Chinese Internet company. After all, Alibaba runs the biggest online retailing business in the world, while other players like Tencent, Sina Weibo and Baidu are also gigantic, a reflection of China’s enormous population and a fast increase in its Web-savvy consumers (there are over 600 million of them now). So to some degree, it’s not surprising that Lee’s work at Didi Kuaidi has helped the company outpace Uber in total volume of business. Even so, his ascent through a series of startup companies is a keen reflection of the entrepreneurial spirit and risk-taking that’s driving the Chinese service sector and creating jobs as the rest of the economy cools off. With Lee’s help, Didi Kuaidi recently pulled in an additional $600 million in venture funding, with one press estimate valuing the company at as much as $8.75 billion. While the company declined to comment, a report by Hong Kong-based GF Securities puts the group’s market share in China at 99 percent.
Meanwhile, Lee and the other top brass at Didi Kuaidi have to worry about keeping Uber in the rearview mirror. Uber, which saw its office in Guangzhou raided at the end of April (apparently on suspicion that it was using unlicensed cars) recently told investors it was growing fast in China. (Uber didn’t respond to a request for comment.) Lee and his team have the home advantage, of course, and Jixun Foo, managing partner at venture capital firm GGV Capital, notes that Chinese companies “are able to localize better and faster than Uber can.” Unlike Uber, for example, Kuaidi’s app allows for booking in advance, and payment is via China’s biggest system, Alipay, managed by a big Didi Kuaidi investor — Alibaba.
Lee, who sports a scruffy goatee along with shaved sideburns and hair that’s swept back over his head, grew up in a family of modest means as the son of an auto mechanic. After moving from the Kowloon Tong section of Hong Kong, where he attended public schools, he earned his accounting credentials at Waterloo University in Canada. It was then back to Hong Kong for work and then to London, before Lee established an online gaming portal, 96PK, in 2009, which he later sold for enough capital to enter the ride-sharing business. “I will not disclose the sales price, because the buyer won’t be happy,” he tells OZY by Skype, throwing his head back with a hearty laugh. He speaks in that distinctive Hong Kong accent — British English with a Cantonese twist — and answers questions with an extremely serious demeanor until something suddenly strikes him as funny.
With the help of $6 million in venture capital support, Lee launched Bumblebee Taxi in Shanghai in 2013. The money first went to build the taxi-hailing app, and then to subsidize riders and drivers in an effort to stoke the volume of business. “That is a very risky move because if the driver collaborates with the passenger [to cheat the company], we’d be losing money like hell,” he says. Though generating revenue wasn’t the immediate goal, Bumblebee quickly became the biggest taxi-hailing business in Shanghai and expanded in Guangzhou before merging with Kuaidi. And then, just a few months ago, Kuaidi merged with its cutthroat competitor, Didi.
Now, Lee says, Didi Kuaidi is thinking about overseas expansion, possibly through an acquisition. For the time being, though, the company has its hands full, and Didi Kuaidi pushing overseas would face the same localization issues that plague Uber in China, Foo says. Meanwhile, many of the company’s roughly 5,000 employees are being deployed to filling stations or shopping areas in China and are offering discount coupons while recruiting drivers and passengers. “China is far from saturated, which is why we focus on our backyard,” Lee says.