As the largest one-stop e-hailing platform in China, DiDi is not only a popular app with an 80 percent market penetration, but also a pioneer of the ‘sharing economy.’ Its general counsel, Yin Yongsheng, shares his insights on the development of online taxi hailing sites and relevant regulations, challenges facing legal professionals in the e-hailing business, and his understanding of the ‘sharing economy’.
ALB: We heard that DiDi has a unique legal department structure. Could you talk about it briefly?
YY: Our legal department is structured like a matrix with horizontal and vertical axes. Along the horizontal axis, there are several legal units specializing in investment and financing, labor law, dispute resolution, intellectual property and policies and regulations; on the vertical axis, we have a dedicated body responsible for supporting various business departments. We call it Legal BPs (Business Partners) for business teams. At DiDi, one or two Legal BPs are assigned to each business line and important function. They serve as the “go-to” persons for the corresponding business department, and are designated to provide a full suite of legal services and supports including routine legal consulting, business negotiation support, document drafting and review and project follow-up. Legal BPs will request professional assistance from specialized legal teams on the horizontal axis to solve highly complex cases or generic issues requiring specialized expertise.
It might be easier to think of our business lines this way: You see taxi, car on demand, designated driving, test driving and bus services whenever you open the DiDi app. These are our front office business lines. Aside from them, we also have very important back office teams such as marketing, R&D and government affairs departments. All of them can turn to their Legal BPs for help if they encounter any problems.
ALB: As the head of DiDi’s legal department, do you have any particular experience you gained while setting up the legal department from scratch and steadily developing it that you want to share with us?
YY: “Fast” and “change” are the two words that we hear the most at DiDi. “Fast” means rapid business development. I am always asked by business team members to review legal risks associated with certain projects, telling me that they plan to launch the projects in a few days, and the preparations are already underway – if everything looks fine, please help prepare necessary documents or build a corporate structure. On the other hand, “change” means that our business has been constantly evolving and diversifying. We now operate more than ten business lines, and this also reflects the development of the legal department. When I joined the company, I made myself ready to support business operations on my own, but soon I realized that I must build a legal team much earlier than I thought. Teambuilding, strategizing and team management are more important than performing tasks myself, so I spent a lot of time on recruitment. Our team structure and individual competency are also constantly evolving. The team went through rapid expansion, but we always followed very strict selection criteria in hiring. Candidates are selected based on their educational and professional credentials, as well as whether they fit in with the company’s cultures and teams. We interview more than 20 candidates before deciding on a hire. Our perseverance has paid off. All members of our specialized teams such as investment and financing, intellectual property and dispute resolution, and business lines are highly qualified. They are competent at handling their job independently and have completed numerous extremely challenging tasks. On the other hand, team members and the team as a whole benefit from challenges in terms of sharpening their skills and expertise. Their personal ability and value have been improved, and the unity and cohesion of our team has also been strengthened.
As well as growing our headcount, we have been working to continuously increase the degree of standardization, automation and systematization of our work. This aim is to maximize per capita productivity, allowing every team member to create more value out of the time they spend at work. A lesson I learnt and would like to share here is that teambuilding is the key. It takes a lot of time and efforts to achieve, but it is also something that I must do as the team leader. I find it having more value than handling a legal case myself. In particular, it has significant implications for fast-growing companies like DiDi. That is why we say: Always see learning and growth as the first priority. Our recruitment criteria have become increasingly strict. A successful candidate should be able to become his own boss in five years after joining the company. This also attests to our broad-minded and liberal attitude toward talent management. We act in the best interest of the company without selfish preferences.
ALB: DiDi recently secured a USD $1 billion financing deal with Apple, which is also the largest financing deal for the company. What are the strategic considerations for DiDi and Apple respectively? And how does DiDi plan to spend the money?
YY: We would not talk about how to spend the money from Apple, because it is part of our latest financing round. We can say that because DiDi places a lot of emphasis on user safety and experience, a large proportion of the money will go to this area; we will also continuously improve our existing products and technology, and bring in world-class talents in various fields with a forward-looking thinking. Our target is to serve 30 million passengers and 10 million drivers a day in the next three years. And all passengers can find a cab within three minutes.
ALB: Security risks associated with DiDi’s e-hailing platform have come to the center of public attention lately. For example, on May 4, a passenger in Shenzhen was hurt by the driver of a car that was hired on DiDi. Has DiDi taken any actions or worked out any plans to address such safety risks?
YY: First of all, we greatly regret what happened. We worked with the police and arrested the suspect on the following day after the incident. After that, our CEO, Cheng Wei, posted an internal letter in which he, sincerely and in a strong wording, called all staff members to make efforts to ensure safety and treat safety as the top priority. Speaking of user safety, we have done a lot in terms of organizational system building and product performance. For example, the company has set up a security committee and a security management department designated to managing safety-related operations. Our APP also has code protection, face recognition, triple-certificate verification, emergency aid and route sharing functions.
At our company, safety always comes first, followed by user experience and productivity at the third place. Many people would place business growth at the top of the agenda for the development of a company, but it is absent in our top three priorities. Of course, we believe that a high market share would come naturally if we perform well on the first three priorities.
What DiDi is doing has never been done in the past, and there might be loopholes in the legal and institutional environments in which we develop our business.
For example, we wanted to buy insurance for passengers, but insurance companies told us that the China Insurance Regulatory Commission did not allow them to sell insurance to companies like ours. This is a realistic bottleneck confronting emerging businesses, and we encountered many other similar challenges during the past four years. What we do is to change the way people travel, so it is inevitable that we come across some difficulties and obstacles. Retrospectively, we get a strong sense of fulfillment after we managed to overcome the obstacles. We also feel very lucky, and are grateful for everything that has happened to us.
ALB: E-hailing offers more efficient cab booking services and real-time cab scheduling, and that is why it is in serious conflict with the traditional taxi industry, like what DiDi and Uber have encountered in China and around the world. What is your take on this? And how can such conflict be resolved?
YY: It is natural for cab drivers to express concerns about their own interests, but they should do so through legal channels. It would be inappropriate if they make their voice heard by staging mass incidents.
Actually, the interests of DiDi and cab drivers are not mutually exclusive. DiDi is dedicated to creating a healthy ecosystem for drivers. We care about passengers as well as drivers. Our goal is to give drivers more dignity, not only car-on-demand drivers, but also taxi drivers.
ALB: The Ministry of Transport promulgated the Interim Administrative Measures for Online Taxi Booking Services (Draft for Comments) and the Guiding Opinions on Deepening Reform and Further Promoting the Healthy Development of the Taxi Industry (Draft for Comments) in October 2015. Many people believe that there are significant deficiencies in these drafts because the regulator still sticks to the same approach that it uses to regulate the traditional taxi industry to manage the e-hailing business. What is your view in this respect? Has DiDi contributed any suggestions about the drafts? What are your rationales behind the suggestions?
YY: Certain provisions in the drafts may affect e-hailing business operations. For example, it is required that e-hailing platforms establish an employment relationship and sign labor contracts with drivers, and that e-hailing companies set up branches at different locations in China. Many experts and scholars argued that such provisions defeat the purpose of doing business online, and are a manifestation that the regulator wants to regulate e-hailing services by applying the same principles used to regulate the traditional taxi business. Needless to say, legislative changes tend to lag behind. Therefore, companies need to continuously improve their products and operations, innovate their operating models, and prove that they can do their business well. At the same time, we believe that government agencies will be able to adapt themselves to the times, and to draw out effective policies that are beneficial to the long-term development of the industry, after thoroughly analyzing suggestions submitted by market players and the general public.
ALB: How does DiDi position itself in relation to Chinese and international competitors? Are you a “taxi company” or a “sharing platform”?
YY: We have established business presence on overseas markets, and have launched cooperation with Lyft in the U.S., Ola in India and Grab Taxi in Southeast Asia.
For example, you can call a cab using DiDi in the U.S. The cab is actually provided by Lyft. And American tourists can call a cab provided by DiDi in China. It is called “roaming service”. Our services can be duplicated, in Southeast Asia and in India alike. It is a form of Sharing Economy. We will continue to be a travel solution platform, a company with advanced technology.
ALB: How would you define “Sharing Economy”? And what has DiDi done in this respect?
YY: We see Sharing Economy as a business where the public share their idle resources with others via a social platform, and get paid for it. DiDi is representative of the Sharing Economy. Let me give you an example. I used to be an old-fashioned person before joining DiDi. I drove my car to the company every day. For a period, I needed to drive my son to play ice hockey, and it was such a headache every time I could not drive my car because of traffic control. I had to wait on the streets if I could not find a vacant taxi. My wife told me that it was very convenient to use e-hailing apps. But I did not know the products very well back then, and was worried about my privacy and personal information as they asked me to provide a lot of personal information. After joining DiDi, I familiarized myself with the company’s business and products, and I realized that the APP was safe to use, and I started to benefit from the Sharing Economy myself.
ALB: At first, DiDi “burnt” a lot of money to grab market share, and now it has cut driver subsidies. When will you stop “cash burn”? And what is your plan to achieve profitability?
YY: Our working capital has multiplied, but we have become increasingly cost-effective, and most of the money is spent on product upgrade and new technology development.
One of the values shared by all employees at DiDi is to “embrace changes”. The company is four years old. The fact that it has managed to acquire such a scale and market influence means that we worked harder than others, and it also means that we made more changes and adapted ourselves to the market. We say that change is the only constant. As legal professionals in such a business climate, we adapt ourselves every single day to keep abreast with the industry. While developing the company’s business, we seek to transcend ourselves and fulfill our value. We will support the company to grow in the right direction through effective application of our matrix structure.
