China’s big two taxi-booking apps to merge
Print Edition
CHINA’S two main taxi-booking apps are set to merge in a bid to promote market growth and bring to an end a long-running price war.
Alibaba Group-backed Kuaidi Taxi and Tencent-backed Didi Taxi announced the planned move in a joint statement yesterday but revealed few details.
The two companies, each of which serves more than 300 Chinese cities, will maintain their brand identities and keep their primary operations separate following the merger, the statement said.
It was not stated what stake each side will take in the venture — which has yet to be named — though the companies’ incumbent chief executives will act as joint CEOs of the new operation.
A Wall Street Journal report said earlier that the new company is likely to be valued at about US$6 billion.
Didi and Kuadi have been locked in a cutthroat battle for customers over the past year, with each offering significant discounts and incentives to passengers and drivers.
With a merger pending, some Shanghai residents fear the days of low-cost cab rides might be coming to an end.
“I usually get a discount of about 5 yuan (80 US cents) or 6 yuan per ride, which is not insignificant,” said local woman Sherry Yao. “I fear those discounts might disappear when the companies merge, but I think I’ll still keep using the apps because it saves me having to wait for a cab at the side of the road.”
Office worker Frank Jiang said that although he has used the apps in the past months, he sees little point in doing so if there are no financial incentives.
“If there are no discounts on offer, I don’t see the difference between using the apps or hailing a cab on the street,” he said.
Under their current promotions, both Kuadi and Didi offer passengers discounts of up to 15 yuan per ride.
Cabbies, meanwhile, can earn up to 800 yuan a week from the various incentives on offer.
With an estimated 500 million smartphone users in China, competition in the taxi booking app market has, not surprisingly, been fierce.
Both Kuaidi and Didi were launched in 2012, and according to Beijing-based research firm Analysys International, Kuaidi currently holds a 56.5 percent share, and Didi about 43.3 percent.
Much of the competition between Tencent and Alibaba in the taxi app market has been driven by their mutual desire to generate business for their mobile payment services.
Users of Didi Taxi are encouraged to settle their bills via Tencent’s WeChat instant messaging service, while Kuaidi users are similarly urged to use Alibaba affiliate Alipay.
Passengers can pay their fares in cash, though many of the financial incentives offered by the firms are dependent on the use of the online payment services.
While tech-savvy users and cabbies have cashed in on the booking and payment apps, the new technology has not been universally well received.
Over the past year, there have been repeated complaints from members of the public who say they can no longer hail cabs in the street as they are always en route to app users.
Similarly, expats and foreign tourists in the country who are unable to speak Chinese have complained of being frozen out of the market.
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