China’s biggest taxi-hailing startup Didi Kuadi is on a look out to raise $US 1.5 billion in a move which will increase the value of the company to more than $12 billion.
Alibaba owned Kuaidi Dache and Tencent-backed Didi Dache merged four months ago to create the company Didi Kuadi which is valued around $6 billion at the time. Didi Kuadi is jointly managed by both the companies but has separate products and branding. The merger is quite a rare case of co-operation between the backers who are arch rivals. Just like any other taxi-hailing app, the app allows the users to request and pay for taxi via smartphone using the GPS.
The announcement for fund-raising comes just three days after the release of the internal letter from Uber’s CEO Travis Kalanick that revealed that the company is seeking for $1 billion funding solely for China. Uber was launched in 2014 and is active in nine cities around the country and claims to do more than 1 million rides every day (the number is approximately equal to all the other markets combined.)
Didi Kuaidi earned their name by partnering with almost all licensed taxi operators. But the shortage of taxis in China made securing a ride very difficult for instance, in places like Beijing it took around 20 minutes. Also, not much was done by the company to take action against the complaint on Taxi drivers like rude behaviour and cigarette odors.
But Uber’s peer-to-peer service pulls in pool of drivers unaffiliated with taxis, so it had enough supply of drivers to manage the demand. Also, the rating system of the company helped in ensuring good service. These factors helped Uber in winning over Didi Kuaidi. Soon after Didi Kuaidi also launched two ride sharing services following Uber. The real challenge lies in convincing the Chinese authorities that they can do serve the society without doing much damage. The violence by the drivers on the passengers have raised protests against Uber and also some raised voices for Uber.
The new funding may accelerate price war among both the companies which is sure to cause headache for the China government. But the best part is that consumers may be showered with many promotions, discounts and free rides by both the companies which is great for the customers.