Yongche steps up drive to do bat­tle with Didi

China Daily (USA) - - BUSINESS - By MENGJING andZHONGNAN Con­tact the writ­ers at mengjing@chi­nadaily. and zhong­nan@chi­nadaily.com.cn

Didi Chux­ing and Uber China may not have an easy vic­tory in China, even though their newly an­nounced merger is ex­pected by an­a­lysts to cre­ate a dom­i­nant player in the coun­try’s rapidly grow­ing ride-hail­ing mar­ket.

Un­der the deal, Didi will ac­quire Uber China while Uber Tech­nolo­gies Inc and Uber China’s other share­hold­ers will re­ceive a 20 per­cent share­hold­ing in the com­bined com­pany.

Yongche Inc, which has im­me­di­ately be­come the No 2 ride-hail­ing player in China af­ter the tie-up be­tween Didi and Uber, said onTues­day that it will soon launch a very lu­cra­tive in­cen­tive pro­gram to gear up the com­pe­ti­tion in at­tract­ing users.

With­out re­veal­ing how mu­chit is go­ing to in­vest in the pro­gram, Yongche, which is ma­jor­ity-owned by the Bei­jing­based in­ter­net ma­jor LeEco, said the in­cen­tive in­vest­ment will be “record high”.

“The ride-shar­ing in­dus­try doesn’t need a mo­nop­oly and there will be no place for mo­nop­o­lists to stand in the in­dus­try,” said LeEco in aWeibo post.

Many in­dus­try ob­servers said the main rea­son for the truce be­tween Didi and Uber China was that the two wanted to end their costly com­pe­ti­tion. Uber has spent at least $1 Wang Xiaofeng, bil­lion a year to gain ground in China, while Didi has been of­fer­ing its own sub­si­dies to driv­ers and riders to build its busi­ness.

Wang Xiaofeng, an an­a­lyst at For­rester Re­search Inc, said the merger of Didi and Uber China could pro­vide more op­por­tu­ni­ties to sec­ond-tier play­ers in the mar­ket.

“Be­cause con­sumers will al­ways want more op­tions and it will never be a mo­nop­oly. For ex­am­ple, the Didi-Kuaidi merger gave­room­for the third player Uber to grow, and this merger will like­wise do the same for smaller play­ers,” she said.

How­ever, Zhang Xu, an­a­lyst with Analysys In­ter­na­tional, said that with Didi and Uber China join­ing hands, it would be more dif­fi­cult for smaller play­ers to gain more mar­ket share.

Sta­tis­tics from in­ter­net con­sul­tancy Analysys In­ter­na­tional showed that Didi had 127 mil­lion ac­tive users by the end of sec­ond quar­ter of the year, while Uber China had 31.07 mil­lion and Yongche had 10.5 mil­lion in same pe­riod.

But the Didi and UberChina merger still needs the au­thor­i­ties’ ap­proval.

The Min­istry of Com­merce said on Tues­day it hasn’t re­ceived a busi­ness dec­la­ra­tion from Didi and Uber though both com­pa­nies an­nounced their merger on Mon­day.

All busi­nesses with a large scale of op­er­a­tions that may mo­nop­o­lize a mar­ket must sub­mit a busi­ness dec­la­ra­tion to the Min­istry of Com­merce, as well as wait for an an­titrust in­ves­ti­ga­tion.

Com­pa­nies with­out such clear­ance will not be al­lowed to carry out a merger and ac­qui­si­tion in China.

Shen Danyang, the min­istry’s spokesman, said as these two com­pa­nies haven’t sub­mit­ted a busi­ness dec­la­ra­tion to the min­istry, their merger will not be­come ef­fec­tive and le­gal.

Didi Chux­ing and its pre­vi­ous ri­val Kuaidi also didn’t sub­mit busi­ness dec­la­ra­tion to the min­istry when they merged last year, ac­cord­ing to the min­istry.

Didi was not avail­able com­ment on Tues­day.

The Didi-Kuaidi merger gave room for the third player Uber to grow...” an an­a­lyst at For­rester Re­search Inc

for

Travis Kalan­ick, CEO of Uber Tech­nolo­gies Inc, and Jean Liu, pres­i­dent of Didi Chux­ing.

PRO­VIDED TO CHINA DAILY

A Chris­tian Dior out­let in Nan­jing, Jiangsu prov­ince.

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