A Didi driver in Beijing. The Chinese ride-hailing company is placing its European expansion plans on hold for a year. Reuters
A Didi driver in Beijing. The Chinese ride-hailing company is placing its European expansion plans on hold for a year. Reuters
A Didi driver in Beijing. The Chinese ride-hailing company is placing its European expansion plans on hold for a year. Reuters
A Didi driver in Beijing. The Chinese ride-hailing company is placing its European expansion plans on hold for a year. Reuters

China's Didi suspends Europe expansion plans over data concerns


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Didi Global has suspended plans to expand in Europe partly because of concerns over how the Chinese ride-hailing company handles passenger data.

Plans to challenge Uber in Europe, including several British cities, have been tabled and some jobs will be cut. The European expansion will be paused for at least a year, according to the Telegraph, which earlier reported the news of the suspension.

“We have established an international talent hub in the UK, recognising the exceptional quality of people in the market,” a company representative said. “Beyond that, any personnel matters remain strictly confidential.”

The Didi representative also said that the company will “continue to explore additional new markets”, and had recently launched services in South Africa, Ecuador and Kazakhstan.

The Chinese transport company had initially considered extending its services to European markets such as the UK, France and Germany during the first half of this year, Bloomberg reported in February.

At the time, the company was hiring locally and setting up a team dedicated to Europe, they said.

News that the company, which is dominant in China, might be expanding sent shares of potential rivals such as Uber and Berlin-based Delivery Hero lower.

Didi began offering car-hailing services in Russia last year, marking its first direct foray into Europe, and it is already an investor in Estonia-based Bolt Technology OU.

But since then, China's regulators began clamping down on ride-hailing fees.

The new restrictions could cut Didi’s margin in the business in half and “accelerate an exit from unprofitable international markets where it faces unrelenting competition in ride sharing”, Bloomberg Intelligence analysts wrote in a report.

“Didi’s position internationally in markets such as Australia and Europe is fairly weak while marketing costs to acquire users from rivals may sustain hefty losses. With much smaller domestic profits to offset international losses, Didi may need to rethink its international strategy,” said the analysts, Matthew Kanterman and Tiffany Tam.

Last month, Didi said it would halt registration of new users during a Chinese government review into its cyber security practices. The Cyberspace Administration of China said the move is to prevent data security risks and protect national security and the public interest.

In an article in the Times earlier this month, UK MPs had also called for Didi’s expansion into the country to be closely monitored over concerns that China could have access to local user data.

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Profile

Name: Carzaty

Founders: Marwan Chaar and Hassan Jaffar

Launched: 2017

Employees: 22

Based: Dubai and Muscat

Sector: Automobile retail

Funding to date: $5.5 million

Red flags
  • Promises of high, fixed or 'guaranteed' returns.
  • Unregulated structured products or complex investments often used to bypass traditional safeguards.
  • Lack of clear information, vague language, no access to audited financials.
  • Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
  • Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

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Tesalam Aleik

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(Rotana)

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SPECS
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: August 24, 2021, 7:16 AM`