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Leader Wednesday: Cheng Wei

Cheng Wei, CEO of Didi

Often when you hear about successful Chinese CEOs, you hear about the likes of Jack Ma, Wang Jianlin etc. For people outside China, the name of Cheng Wei does certainly not ring a bell. However, Cheng Wei, or Will (as some of his colleagues use his English name) was announced as Forbes Asia’s 2016 Businessman Of The Year. In Less than a decade Cheng Wei went from a manager at a foot massage chain-store, to become the CEO of one of the biggest private companies in the world and defeating Uber in an epic battle in China.

Cheng’s way to the top was not easy. Born in Shangrao in 1983, a city located in the south-eastern province of Jiangxi, Cheng later moved to Beijing where he studied and received his bachelor’s degree in administration from Beijing University of Chemical Technology. The crucial college entrance exam didn’t really go as well as he expected. Stressing through the test, Cheng missed the last three mathematics tests, resulting in a place in Beijing University of Chemical Technology, by many considered to be a second-tier university in comparison to the more prestigious universities in the mainland. Cheng planned to major in information technology but was instead allocated by his university to business management. Like many other Chinese students usually do, Cheng worked as a sales guy, selling life insurance. It didn’t really go well for him, as he failed to sell a single policy.

After graduating, Cheng applied for what he thought was an opening as a manager’s assistant at a company presenting itself as a “famous Chinese health-care company”. The company however, wasn’t really a health-care company, but rather a chain of foot massage parlours. Cheng didn’t really have much of a choice as he had already arrived in Shanghai, with his luggage in his hand.

The career of Cheng had a positive twist after getting an entry-level job at Alibaba in 2005, at the age of 22. According to Cheng, Alibaba will always be a company that he will be thankful towards, because they welcomed him. His career at Alibaba started quietly as he kept a low profile, however Cheng climbed in ranks later on and eventually worked under an executive named Wang Gang, a person whom after being ignored for a promotion made a decision that would change the life of Cheng.

In, 2011 Wang decided to gather Cheng and other juniors in order to brainstorm about start-ups and different business ideas. Inspired by Hailo (a U.K. company that worked with London’s famous black cabs). Cheng argued that their business model would be suitable for the Chinese market. Both Wang and Cheng left Alibaba in 2012, and Wang invested 800,000 RMB in Didi (Today the shares of Wang are estimated to be worth 1 billion USD)

Taking on Kuaidi and Uber.

After setting up a 100-square meter office in the northern part of Beijing. The team spent their first months to outsmart the competitors that had the same ideas as them. According to Cheng, many copied Uber’s U.S. strategy of working with limousine and town car chauffeurs, which didn’t seem very smart since the amount of black cars in China is very limited. Didi put a lot of emphasis on providing their free app to the younger drivers whom were more likely to spread the word and promote Didi than their older counterparts. According Cheng, it was a snowstorm in late 2012 in Beijing that decided the future of the company, as residents booked 1,000 orders in a single day, making it a historical mile stone for the company.

The hype grew, and a Beijing venture capital firm invested $2 million in Didi. The arch-rival of Didi, Kuaidi (Backed by Alibaba) set their sight on each other. During the tough battle, Cheng contacted Pony Ma, The founder of Tencent and asked to borrow 50 engineers and a thousand servers. Ma agreed, however Didi weren’t making any money. After visiting the U.S for the first time in order to raise capital, Cheng was rejected.

Eventually things changed, Tencent had a successful promotion over the holiday called Red Packet, which sparked an idea that the company actually could capitalize on mobile payments and transfers, where Didi could play a significant role in increasing the transactions. This was one of the main reasons to Tencents increasing investment in the company. It didn’t take long until Alibaba did the same with Kuaidi. Didi and Kuaidi controlled the market. Eventually the two companies merged, with Cheng running the merged company. Cheng was now in position to take on Uber. In late 2013, Uber technologies CEO, Travis Kalanick and a team of Uber executives visited Didi’s offices. One of the first things Cheng said during the meeting was “You are my inspiration”. Being modest and yet ambitious Cheng wasn’t shy to express his opinion by walking over to a whiteboard and explaining how Didi would eventually overtake Uber.

Cheng was right, Didi crushed Uber in China. The end of the war between the two companies came after both companies burning billions of dollars. According to Cheng the truce became reality after Michael Kalanick and Cheng met at a hotel bar in order to agree on a business deal. Didi bought the Chinese section of UBER. Uber and Didi each have one seat on each other’s board (without voting rights). Didi won the battle in China, and even though the company wants diversify their business according to Cheng, the battle for global dominance between the two companies is not over yet.

The CEO.

After being offered 40% investment by Uber, Cheng’s answer was “Why would I take it?”. It may not have been the answer that the Uber CEO Travis Kalanick wanted to hear nor expected to hear, however, it was an answer that impressed him, as he later praised Cheng for being very different from other ride sharing founders.

Behind the confident approach that Cheng was demonstrating to the Uber executives, there was a guy working hard together with his colleagues in order to defeat Uber. Cheng stated that “At that time we felt like the People’s Liberation Army, with basic rifles, and we were bombed by airplanes and missiles. They had some really advanced weapons.” In order to adjust to the daily results in the battle with Uber, Cheng had held morning meetings with his senior staff, meetings which he called the Wolf Totem (based on a popular novels). Cheng was very clear when it came to the battle with Uber. He honestly told his employed that if they failed in beating Uber, they would not survive as a company.

Beating Uber is not an easy task for any CEO. While some argue that Didi were favoured in the Chinese market by the Chinese government and Tencent, one cannot undermine Cheng’s strategies and decisions when taking on Uber such as hiring the right people, and bringing in investment from crucial partners.

Being humble is one of the traits that describes Cheng as a person. Being the only entrepreneur to stop Uber’s ruthless advance, Cheng doesn’t think of himself as superior to others, even after such an epic cash burning battle against Uber. Cheng continues to be respectful by highlighting the positive aspects of Ubers entrance in China by claiming how Uber “is more like a start-up, full of passion, feeling like they are fighting for themselves.” These were the words of a CEO known as the Uber Slayer, and beating one of the richest start-ups since Bill Gates ran Microsoft. Beating Uber is not enough for Cheng. He wants to evolve his business as self-driving cars are the next step for Didi’s expansion plan.

While keeping a much lower profile in public than many other Chinese tech entrepreneurs, old blog posts by Cheng gives us a closer insight to his personal life and thoughts on managing teams and business. The blog posts give an impression of a knowledgeable but still a simple and humble person, often drawing parallels in his posts to military tactics and Chinese philosophy. Being a dedicated reader of Chinese history and philosophy Cheng once wrote “The most important thing in the world is not to gain anything, but to provide friends and family a shoulder to lean on when their heart is in pain.” Another text posted on his blog emphasised the importance of team play as Cheng wrote that “One person can walk fast, but only a group of people can last long.”

When working in Didi, Cheng emphasised that Chinese internet companies on Chinese soil never lost to foreign companies, and that was not something that Didi would do either. He often used patriotic songs in order to encourage his employees and to create a ‘rule of the jungle’ mentality. This was not done in order to bully his employees, but, rather creating a feeling where they could count on him as a leader and someone they could enter a battle with.

Source: Forbes | Bloomberg | Reuters

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