No matter the industry you are in, one thing is certain, China is one country that no one should underestimate, because thanks to its large population it can immediately shift the economic power in the world quite fast. A similar thing happened when a Chinese car hailing operator named Didi Kuaidi announced that it will give away more than $161 million in the form of free rides in order to promote a new chauffeur service that it offers.
The company on its own is backed by the Tencent Holdings and the Alibaba Group Holding, and it’s expanding rapidly in the carpooling as well as ride sharing sectors after it managed to dominate the Chinese taxi hailing. As you would expect, the move will definitely have a major impact in the market share and profits of Yidao Yongche and Uber Technologies, two of the other companies that offer transportation services in China. The car hailing industry in China is dominated by Kuaidi and Didi, with Uber having 11%, much less than the 78% acquired by the aforementioned companies.
Didi Kuaidi wants to work hard in order to design a network that will deliver taxi services within just a few minutes and help 30 million people for each day. Mobile apps are the way of the future, according to Didi Kuaidi, and they plan to use it in order to cover all the commuting needs of the population the right way. While the two companies were rivals, they created an alliance and thus managed to acquire most of the transportation market. Tencent as well as Alibaba are owning around 13% and 10% in the merged company.
It’s important to note that Didi Kuaidi managed to bring a set of stellar results right in the beginning of this month, when it was announced that the city of Shanghai will include the services created by the company in a new, professional taxi booking platform. This would be the first official mobile booking app, but the interesting thing here is that Didi Kuaidi also plans to cooperate with even more local governments in order to increase the market share. Sure, the cities aren’t named for the time being, but this is a major step in the right direction. As a side note, the Uber office in Southern China was raided recently.
In conclusion, while it can be very hard to match Uber’s global reach, Didi Kuaidi does a great job in bringing in a much better set of results in the local Chinese market. If the company wins the battle here, then I am sure they will try to expand in the other Asian countries as well and, maybe in time, access the international market. There is a lot of potential, so all we can do now is to wait and see what outcome will appear after the Didi Kuaidi developments.
Bloomberg: China Is One Market No One Can Afford to Ignore (Gary Shapiro)
Source: Bloomberg
Photo credit: Didi Kuaidi
