China’s Didi Chuxing Enters Food Delivery Market

China’s ride-hailing leader Didi Chuxing announced it has launched a food delivery service.

The company confirmed it is running a pilot food delivery service in Wuxi, a city in southern Jiangsu province. But there are plans to expand to other locations in the future.

Didi claims the service, which launched on April 1, has already captured one-third of the market. But as TechCrunch pointed out, food delivery services often attract new customers with special deals, so it’s too early to take any data seriously.

Didi Chuxing also said it recently raised $1.6 billion for the new business and began recruiting delivery drivers in Wuxi last month, according to TechCrunch’s Chinese partner site TechNode.

Luo Wen, who leads the new Didi service, said the company plans to complete the Wuxi trial “as swiftly as possible” in order to launch the food delivery platform in additional locations.

“We are looking to expand the service to more cities in the near term,” he added.

For five-year-old Didi Chuxing, getting into the food delivery service market is a logical step. Uber Eats expanded globally last year, while local competitors Ola, Grab and GO-JEK have already entered the space. If anything, it’s surprising that Didi, which boasts a $56 billion valuation and has investments across five continents, is only just entering the market now.

The company has made plenty of moves to expand its reach. It acquired Uber’s China-based business in 2016. And since Uber was backed by Baidu, the deal meant Didi had the three biggest tech firms in China as investors, with the other two being Alibaba and Tencent.

And late last year, Didi announced it raised $4 billion in new capital, adding to the $13 billion from investors, including Alibaba, Tencent and Apple, among others. The focus of that round of funding, according to the company, will be to expand the company footprint globally, further develop their electric vehicle initiative and invest more aggressively in artificial intelligence tech.