China’s ride-sharing giant Didi Chuxing, which owns around 80 percent of ride-sharing market, will lay off around 2,000 staff, or 15 percent of its entire workforce this year, according to several Chinese media reports on Friday that cited internal information from the company.
Didi will focus on its core mobility services, with most of the layoffs to come from the business units that either underperformed or are facing restructuring, Didi CEO Cheng Wei said during a conference, as quoted in the reports.
Cheng nevertheless said the company will beef up investment in key areas such as safety technology, driver management, as well as the firm’s global expansion. He also said that the company will recruit 2,500 people within these key areas to keep the headcount at 13,000 by the end of 2019, similar to last year.
Didi’s strategic change came after the company had reportedly lost 10.9 billion yuan in 2018, which was much worse than the 2.5 billion yuan loss from the year prior. The huge loss last year largely came from its subsidies to drivers, which reached 11.3 billion yuan in 2018, according to the reports.
The shutdown of its carpooling service was also considered to be another major reason for the revenue decrease. Didi had suspended its Hitch ride-sharing service on August 27 after police said a female user of the service was raped and killed by her driver in Wenzhou, an Eastern Chinese city.
The services have yet to be resumed despite Didi having introduced several measures to improve its safety standards following the incident.
Didi’s huge subsidies were introduced after many drivers complained that the Chinese startup took up to 30 percent commission from payments by passengers. A screen-shot of the Didi app, taken from Chinese reports, showed that a Didi driver had earned 17292 yuan in December, of which 27 percent (4695 yuan) of the income was given as a subsidy or “reward income”.
A Didi executive said that the company would look into the controversial issues surrounding commissions to drivers and subsidies for drivers to meet the needs of passengers in a fair manner.
The ride-sharing company began dominating the market after Didi bought Uber’s local Chinese operations following a bruising two-year battle.
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