Didi Will Stop Food Delivery in Japan as It Delists in US

Didi Global is shuttering its food delivery service in Japan on May 25 as it also moves to delist from the New York Stock Exchange, according to reports.

“Unfortunately, due to local market conditions, we have made the difficult decision to discontinue DiDi Food in Japan from 25 May 2022 and will focus on our taxi-hailing services in the country,” the company said, according to Nikkei Asia.

Related: Delisting News Leads DiDi to Drop 23%

The company launched its services in Japan in 2020. The majority of Didi Food’s staff of about 200 people in Japan will be laid off on May 25, according to a LinkedIn post, Nikkei Asia reported.

The ride-hailing unit of Didi in Japan is operated by a separate company, DiDi Mobility Japan.

Sources told the news outlet that Didi’s food delivery unit in Japan was suffering from a lack of support from Didi Group’s overall main investor Softbank. While SoftBank backed Didi’s ride-hailing service, it passed up putting money into its food delivery arm in Japan since it’s already an investor in Uber Technologies there, sources told Nikkei Asia.

Didi used to be China’s biggest ride-hailing firm but more recently has scaled back its quest to expand internationally. That decision followed pushback from Chinese officials after the company listed in the U.S.

Since listing in the U.S., Didi’s stock price dropped 90%. A vote regarding its delisting is planned in May, per reports.

Germany’s Foodpanda, run by Delivery Hero, also said it’s planning to sell off its Japanese unit. Japan’s digital food delivery sector flourished during the pandemic but has since struggled to retain and acquire users in the aftermath.

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The Foodpanda brand in Asia said it was pulling out of the region because of increasing competition and a lack of drivers to fulfill customer orders. Delivery Hero and FoodPanda came to Japan in September 2020 but the escalating competition caused the companies to instead focus their resources on other regions.