Bottom line: Didi's Brazilian acquisition looks relatively shrewd and could be followed by more such moves in developing markets, while its purchase of a local bike-sharing firm looks less prudent.

China's homegrown Uber is in a couple of headlines as we round out the first week of the new year,  reflecting its global aspirations and also its desire to expand beyond its original car-based services at home. The first headline has Didi Chuxing making its first major overseas acquisition in Brazil, while the second has it buying what is probably China's largest shared bike operator behind the leading pair of Mobike and Ofo.

Each of these headlines is interesting though not earth shattering, and in my view probably reflect the fact that Didi has too much cash more than anything else. This is a classic problem for this kind of superstar Chinese startup, which often runs into the unusual problem of raising more cash than it really needs simply because so many investors want to buy in. At the same time, Didi's own car services business has probably shrunk over the last year, following a clampdown by many major cities and also as the novelty factor wears off for many consumers.

Let's begin with the Brazilian investment, which I'm fairly certain is Didi's first fully-owned purchase outside of China. Specifically, Didi has purchased Brazilian firm 99, with media reporting the price at about $300 million. (English article) Didi previously took a small stake in the company last year, so apparently it liked what it saw. The Brazilian company looks like a relatively big player, with 14 million users in 400 cities nationwide.

The purchase will put Didi back in competition with the local unit of US giant Uber, in a sort of replay of what happened several years ago here in its own home market. That cut-throat battle saw Didi emerge as China's dominant player after its own formation from the merger of two other major local companies. Didi and Uber duked it out for more than a year in China before finally agreeing to a landmark merger. Perhaps another similar merger is down the road now for 99 and Uber's Brazilian unit, though that's purely my speculation based on past experience.

Didi has previously made minority investments abroad, including one in Southeast Asia's Grab and another in India's Ola. It also had a partnership with US giant Lyft, though that alliance seems to have run out of gas lately. But this Brazilian move does appear to mark its first major pure offshore acquisition. It's possible Didi may try something similar with Ola, Grab or even Lyft, since, like I previously said, the company seems to have too much money.

The strategy looks ok in principle, though I suspect Didi will face many challenges if it tries to integrate these overseas assets that all use very different technologies. Then there's also the money-making factor, since most of these companies are thought to be losing money still. But the model does appear to have some profit potential, though when any of these companies might actually turn such profits is anyone's guess.

Biking to Nowhere?

Next there's the deal at home, which has media reporting that Didi has agreed to purchase the struggling bike sharing startup Bluegogo. (English article) There's not much detail in the reports, which are based on unnamed sources, except to say that the pair signed a deal in December. I had heard from one of my sources that Bluegogo has been looking for a buyer for quite sometime, as apparently the company -- like everyone else -- was bleeding cash.

This really is a space that is probably only big enough for two major players, and leaders Mobike and Ofo have already taken those spaces. There was really no reason for either of the leaders to buy Bluegogo, since both Mobike and Ofo already have a major presence throughout China and Bluegogo wouldn't have added much. But Didi's purchase seems to imply it intends to make a stab at the space, meaning our streets here in Beijing and throughout China could soon be getting more clutter from a new surge in Bluegogo's trademark blue bikes.

I personally wouldn't advise Didi to get into this business, and instead would suggest it save its cash for operations at home and also perhaps some other offshore purchases like the one in Brazil. The bike-sharing business is looking increasingly dicey to me, even for one or two companies, since it's highly seasonal and also subject to big losses from damage and theft. But it appears that Didi doesn't mind those big obstacles, and could be preparing to inject some new and unneeded competition in the market.