Didi Chuxing used to be the darling of the startups. Less than a year ago, the Chinese company was known as the unicorn on wheels, or a fledgling firm worth more than US$1 billion, after another round of funding totaling $500 million.
But after being embroiled in a serious of scandals, Didi has lost its magic despite being valued at around $56 billion.
Safety concerns were first raised in May when a 21-year-old woman was killed in the city of Zhengzhou in China’s central province of Henan after using the ride-hailing app, which pairs up commuters heading in the same direction.
Then in August, a 20-year-old woman was raped and murdered in Wenzhou, a port city in Zhejiang province, while using the service.
Both incidents sent shock waves around the industry with the Chinese authorities announcing a series of measures to crack down on the ride-hailing sector.
Earlier this week, the Ministry of Transport targeted Didi after accusing the market leader of violating multiple “safety rules.”
The findings were scathing with the MoT flagging up the company’s failure to vet high-risk drivers in a notice on its official social media account.
“The driver’s qualifications and background checks are not in place,” the MoT stated. “The company’s management of people and vehicles is out of control.”
In response, Didi CEO Cheng Wei admitted that the once trendy online firm would need to work hard to iron out problems and regain the trust of commuters.
“As a young company, Didi still needs to work on many shortcomings and imperfections that have brought the public great concern,” Cheng Wei said in a statement.
“Even if the industry might not be able to completely root out criminal behavior or accidents, we will try our utmost best to protect riders and drivers.”
How Didi emerges from this regulatory road crash will decide the ride-hailing app’s fate.