Tech giant, Apple Inc. (AAPL - Free Report) has reportedly got a seat on the board of Didi Chuxing, China’s largest cab hailing service, a few days after it made a whopping $1 billion investment in the company.
Citing a regulatory filing, The Information first reported that the appointment was made in June but had not been disclosed then. Apple’s head of M&A, Adrian Perica, represents the company on Didi’s board.
Apple’s investment in the Chinese firm is expected to help it understand the regional market. Back in May, CEO Tim Cook had said, “We are making the investment for a number of strategic reasons, including a chance to learn about certain segments of the China market. Of course, we believe it will deliver a strong return for our invested capital over time as well.”
Chuxing’s investment could also help aid the development of Apple’s rumored self driving car. Analysts observe that Didi’s fleet of cars could serve as an “ideal test platform for autonomous hardware and software integration.”
China remains an important market for Apple, given the increasing number of middle-class customers. Apple believes that China, which is already the second largest iPhone market, will become a major contributor to its total revenue going ahead. Though the last two quarters witnessed sluggish growth, the company remains optimistic about the long-term growth prospects of the region. However, stiff competition from regional players is something Apple needs to be extremely watchful about.
Apart from investing in Chuxing, Apple has increased the number of retail stores in the region (at the end of the third quarter there were 41 stores). In Aug 2016, the company had announced its plans to set up an R&D center in Beijing while a couple of days back there were reports that it was setting up a new research and development (R&D) center in Shenzhen.
As far as Chuxing is concerned, Apple’s billion dollars is one of the biggest investments the company has ever received. Reportedly, Apple’s investment helped to end a long drawn battle with Uber China. In Jul 2016, Chuxing acquired Uber’s China operations. The deal gave Uber Technologies one fifth stake in Chuxing while CEO of Uber, Travis Kalanick was made a board member but without any voting power. Following Uber China’s buyout, Didi Chuxing is estimated to be worth over $35 billion.
Chuxing came into existence in 2015 following the merger between Didi Dache and Kuaidi Dache. Chuxing’s investors include tech giants Alibaba (BABA - Free Report) , Baidu Inc. and Tencent Holdings. Headquartered in Beijing, it operates in over 400 Chinese cities and has over 300 million users.
Currently, Apple is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the broader tech space is Intel Corporation (INTC - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for 2016 for Intel has gone up to $2.61 from $2.52 over the last 30 days.
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