Apple’s Success in China (Part 8): Inexplicable Investment in DiDi

This is Part 8 of a 9-part essay series on Apple’s Success in China. Part 1 introduces the essay series. Part 2 explains Apple’s product-zeitgeist fit in China. Part 3 looks at product localization. Part 4 looks at Apple’s services in China and relationship with Tencent. Part 5 looks at the complexities of operating in China. Part 6 and Part 7 look at Apple’s compliance efforts in respect of the App Store and iCloud respectively. Part 8 looks at Apple’s investment in DiDi. Part 9 concludes with lessons from Apple’s experience in China.

Investing in China

Apple’s investments in China have always deviated somewhat from its usual practices.

For example, since 2017, Apple “has set up four research and development centers in China—one each in Beijing, Shenzhen, Shanghai, and Suzhou—entailing a combined investment of 3.5 billion yuan ($509 million) and employment for over 1,000 people dedicated to innovation in hardware, software and services”.

This is despite Apple’s highly centralized organizational makeup, which tends to concentrate its staff in Cupertino and had only recently expanded to San Francisco.

But most atypical of all is Apple’s ostensibly inexplicable $1 billion investment in DiDi, a Chinese Internet ride-sharing company, in 13 May 2016.

Apple’s M&A Philosophy

Apple’s DiDi investment cannot be explained as a strategic investment. Apple’s mergers and acquisitions strategy typically involves Apple acquiring outright small companies whose products and technologies can be easily integrated into existing company projects, rather than investing in a minority stake. (See this Wikipedia list.)

For example, the semiconductor company, P.A. Semi, was acquired at $278m and lay the groundwork for what became Apple’s proprietary A-series SOC. Similarly, Siri Inc. was acquired at >$200m, whose technology later became Siri on iOS.

This M&A pattern is explained by Apple tendency towards vertical integration and the so-called Tim Cook doctrine of “owning and controlling the primary technologies behind the products [Apple] makes”.1

The investment in DiDi clearly bucks this trend.

First, the investment is simultaneously too large ($1 billion) and too small (no controlling stake) by Apple’s standards. It also does not make sense as a purely financial investment as it is Apple’s general position to either hold onto cash or to return cash to shareholders, as opposed to making purely financial investments on behalf of its shareholders.2

Second, there is no clear synergy between a B2C ride-hailing company and Apple’s businesses. Speculation of collaboration between DiDi and Apple’s long-rumored foray into the automobile industry frankly does not make any sense. Given that Apple’s organizational DNA is geared towards creating vertically integrated products, rather than partnering with other companies, it is not clear there is any meaningful scope for collaboration between Apple and DiDi. If there is any worthy opportunity for Apple to pursue in this space, it must be significantly larger than the $1 billion Apple has invested.

Third, perhaps most tellingly, DiDi is also notable for being the only China-based company to have received an investment from Apple.

Explaining the Inexplicable

To make sense of the DiDi investment, it is important to note that the deal was negotiated by DiDi’s president, Jean Liu Qing, who is the daughter of Liu Chuanzhi, the politically connected founder of Chinese computer maker Lenovo Group Ltd. She also led government relations, public relations and new business initiative at DiDi during a time when DiDi was very much upsetting local Chinese governments for disrupting their taxi licensing system.

At the time of the investment, DiDi and Uber were still competing for the Chinese market. It is unclear to what extent Apple’s investment played a role, but shortly after the announcement, Uber subsequently exited the Chinese market by having its China business acquired by DiDi in August 2016.3

According to regulatory filings, Apple’s mergers and acquisitions chief Adrian Perica will be taking a seat on the board of DiDi, alongside Martin Lau (president of Tencent), Lucy Peng (an executive at Alibaba), and DiDi president Jean Liu and CEO Cheng Wei.4 This is notable because DiDi is one of the few Chinese tech companies to count both Tencent and Alibaba as its investors. There is no space here to elaborate on the all-encompassing rivalry between Tencent and Alibaba. For our purposes, it suffices to note that Apple’s investment would not be perceived as taking a side in the rivalry between Tencent and Alibaba, which typically demand that its portfolio companies reject investments from its rival.

In light of the above, Apple’s DiDi investment is best understood as an attempt to improve Apple’s relationship with the Chinese government by demonstrating its long-term commitment to the Chinese tech ecosystem.5

To a Chinese audience, the idea that an investment in DiDi is supposed to promote Apple’s relationship with the Chinese government might come across as slightly jarring. Much as ride-sharing in the US has greatly annoyed city governments, who do not enjoy disruption to their taxi licensing monopoly, DiDi has had a comparably difficult experience with local Chinese governments. However, as this essay series has noted, the Chinese state is not monolithic and the key source of regulatory hassles for Apple has primarily been Internet regulation implemented by the central government, not the local government.


Apple’s investment in DiDi thus represents another way in which the complexities of the Chinese business environment require Apple to deviate from its usual practice—in this case corporate M&A—in other markets.

  1. In the instances where Apple invested a minority stake (e.g. Akamai Technologies and Imagination Technologies), these companies were relatively small, the size of Apple’s stake was small and Apple was a client of these companies’ services.[]
  2. This is unlike, say, Google’s “Other Bets”.[]
  3. Thus, there is at least a plausible perception that Apple’s investment helped a “Chinese company defend its home turf against a US company”.[]
  4. As such, a case could be made that this investment, and the resulting board seat, allow Apple to acquire corporate intelligence of the Chinese tech industry.[]
  5. The investment also came shortly after the various Apple digital content streaming services were shut down by Chinese regulators. It is unclear if the two events are linked, however.[]