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After Second Passenger Murder Case, Uncertainty Looms on Didi's IPO

Aug 28, 2018 by Lousie Dang
After Second Passenger Murder Case, Uncertainty Looms on Didi's IPO

Chinese ride-hailing giant Didi Chuxing on Sunday announced that it would suspend its car-pooling Hitch service across the country after the police said a female passenger was raped and murdered by its driver a day before. The incident took place in the eastern city of Wenzhou. Nearly three months ago, another passenger, a 21-year-old flight attendant was also found dead after hailing a ride downtown home.

Police in Wenzhou’s Yueqing city said on their official blog that the 20-year-old woman called the Didi Hitch at 1 pm on Friday, and lost contact after sending her friend a message asking for help.

Police found the suspect at 4 am on Saturday, a 27-year-old male from Sichuan province. The driver confessed his crime and the victim’s body was then recovered.

A day before the murder, another female passenger had complained to Didi that the same driver had repeatedly harassed her, drove her to a remote area and stalked her for a while after she jumped out of the car. Didi, however, claimed that the customer service representative who took the complaint had not followed up with an investigation within two hours, as the firm promises in it service policy.

Didi’s customer service failed to respond and provide necessary assistance when the victim asked for help via Didi’s App.

The ride-hailing giant published its official statement saying the company is immensely saddened by the tragedy. “We are deeply sorry. We fell short of both customers and society’s expectations. We can’t and we won’t shirk from our responsibilities,” it said.

Didi was asked by the local government of Zhejiang Province to revamp its service.

In fact, Didi has been trying hard to put a socialization feature among strangers into its Didi Hitch services. The background check of drivers are much looser than its other car-hailing services, and its service fare is much cheaper. Besides, drivers are allowed to append notes and tags about passengers, many of which proved to focus on women’s appearances.

These tags include “intellectual beauty”, “sweetheart” and “pretty girl”. All comments on women’s appearance are open to all Didi drivers.

Didi has been criticized for its attempt on adding socialization feature on car-hailing services, since ride-sharing requires drivers and passengers, who are strangers, to meet in person, which will particularly put female passengers in danger.

Didi should accept the reality that they cannot be another Tinder based on car-hailing.

On the other hand, China’s central government also announced to tighten its policy control on the car-hailing service, which will further affect Didi’s business in domestic market. The Ministry of Transport, China, published a criticism note on its official website on Monday morning stating that cab-hailing companies in China have been taking advantage on the grey area of law to make profit and has neglected the public safety.

The National Development and Reform Commission also said in a statement that various government departments will push to improve overall governance of car-hailing operators. The use of China’s social credit system will also be expanded to the transport sector.

With 450 million users and 7.43 billion car-hailing services provided in China last year, Didi has been actively in talks for a multi-billion-dollar initial public offering by the end of this year. Central government’s intervention after Didi murder undermine the market’s confidence and therefore add more uncertainty on the giant’s IPO process.

Lousie Dang

Lousie Dang is a Beijing-based investment analyst. She focuses on innovation and investment in emerging markets. She can be reached at wd602@nyu.edu

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