The Stack Archive

$700 million investment in Didi Dache dashes Uber’s hopes in China

Tue 9 Dec 2014

In the wake of Softbank’s recent $250mn (£159mn) investment in GrabTaxi, the bid for domination of the taxi-app market in China is becoming very committed – today it is reported that cab-hailing company Didi Dache has raised $700mn in round D funding for its Didi Taxi mobile system, greatly surpassing the $100mn committed to it earlier this year by Tencent Holdings Ltd.

The new investment comes from Singapore-based Temasek Holdings and DST Global Solutions, which was acquired by Statesiders SS&C Technologies at the beginning of this month.

The Chinese taxi-app market has been divided between two major players since the popularisation of the app-cab concept – Didi Dache and Kuaidi Dache, who in combination represent nearly 100% of the Chinese tap-and-ride market, despite attempted incursions from marginal players such as GrabTaxi, Ola, Lyft…and the lately much-benighted Uber, currently suffering very negative PR in Asia and unlikely to commit any competitive Chinese investment from such a rear-guard position.

Didi Dache Taxi covers over 300 Chinese cities, with 100mn users placing 5.2mn ride-orders daily and tended to by over one million licensed and registered taxi drivers. Like its chief rival, Didi Dache Taxi has gained traction by integration with social media – users communicating via the WeChat app gain order a taxi from Didi Dache from within the app itself. Kuaidi Dache integrated itself into the popular Alipay Wallet app at the end of January this year.

It should be considered that these systems are not attempts to subvert or transform an existing market in quite the way that Uber and its imitators are attempting – the two battling Chinese taxi-apps are simply facilitating – and arguably growing – existing licensed infrastructure. Since Uber’s capitalist edge is missing from the model, the competition between Didi Dache and Kuaidi Dache has become known colloquially as ‘shaoqian dazhan’ (‘the battle of burning money’).

The taxi app market in the Chinese region is estimated to be worth £637mn. Kuadi retains pole position with coverage in 358 cities, but Temasek – and other partners who have committed to Didi Dache’s position today -clearly has its eye on the lead, whatever that may turn out to be actually worth in terms of return on investment.

In July Uber CEO Travis Kalanick announced Uber’s entry into the Beijing market, the 100th city where the amateur-taxi service has established itself, preceding a soft-launch with a trial period in Shanghai, and limiting the resistance it has met in many cities by initially associating itself with established car-rental companies. Under Uber’s off-template Asian marketing tactics, it initially found itself more in competition with the car-sharing/rental schemes YongChe than with publicly-regulated taxi organisations. With the battle of the Dache giants dwarfing Uber’s Chinese market-share, today’s announcement seems likely to drive the San Francisco-based company further into smaller skirmishes with players of its own size, as it struggles to understand the Chinese market well enough to repeat its global success in China anytime soon.


Asia China Didi Dache news taxi-app Uber
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