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Didi Chuxing Is Now In the Car Rental Business

Didi Chuxing Is Now In the Car Rental Business. Science & Technology World Website


Chinese ride-sharing app Didi Chuxing is adding a new business model: car rental service.

The company today launched its own online car rental business through an asset-light model in cooperation with existing leasing firms. Financial terms of Didi's deal were not released.

In 2015, 58.5% or 2.34 billion of China's 4 billion domestic tourist trips were completed in rental cars. The number is expected to surpass 5. 8 billion by 2020 according to estimates by the China Tourism Automobile and Cruise Association. According to Roland Berger Strategy Consultants, the value of China's short-term car rental market will grow from CNY6 billion in 2013 to CNY18 billion in 2018 at a CAGR of 27% much higher than the growth pace in the United States, Japan and other developed markets.

Rather than owning cars, Didi Car Rental works with car rental and leasing companies in an asset-light, high-efficiency sharing-economy model. Our data-driven rider-vehicle matching system and economy-of-scale advantages will help our partners improve their operational efficiency, reduce operations costs, and better organize under-utilized social resources to meet travelers' dynamic demand.

Didi Car Rental has been in beta testing since July in Shanghai, and plans to expand to more tier-1 and 2 cities by H1 2017.

A few weeks ago, U.S.-based Uber decided to exchange its local Chinese operations for a 20% stake in Didi Chuxing, and then Didi invested USD1 billion in Uber at a USD68 billion valuation. This deal made Uber the biggest shareholder in Didi.


Experts say Didi-Uber merger may constitute a monopoly

Experts say Didi-Uber merger may constitute a monopoly Science & Technology World Website


Experts at a seminar on Aug. 3 said that the Chinese government should investigate the Didi-Uber merger, as many suspect that the deal may cause a monopoly in the future. Discussions began after Beijing-based Didi, the dominant ride-hailing service provider in China, said in a statement on Aug. 1 that it would buy Uber's China operation.

According to a report by Beijing Evening News on Aug. 2, Didi said that its market penetration rate is only 1 percent in Beijing, which will not cause a monopoly. However, experts attending the seminar argued that it should be made clear whether the market included taxis, buses and the metro.

The government should focus on Didi's relevant market to decide whether or not it will cause a monopoly in the future, rather than focusing only on its market share, said experts at the seminar, discussing whether the merger should be stopped by anti-trust authorities.

Speaking from a law perspective, Cui Fan, a senior advisor at Beijing Dacheng Law Office, said that the key factor in merger cases is not the relevant market but the business volume. Dong Zhongwei, a partner at another Beijing-based law office, said that the Ministry of Commerce should undertake an anti-trust investigation. If the company's market share after the merger is expected to be over 90 percent, authorities should stop the deal, Dong added.

According to Chinese law, all businesses with large-scale operations that could potentially monopolize the market must submit business declarations to the Ministry of Commerce for record, as well as submit to anti-trust investigations. Afterward, companies without clearance are not allowed to carry out mergers and acquisitions in China.

The Ministry of Transport released the country's first nationwide regulation on car-hailing services on July 28, finally offering the booming industry a legal status. The new regulation actually encouraged car-hailing services in China. The merger, meanwhile, may not be in the best interests of customers, leaving them with fewer choices for their car-hailing travel, said Cong Lixian, a law professor from Beijing Foreign Studies University. Cong hoped that the Ministry of Commerce Ministry could do something to help customers.

In the mean time, Fang Xingdong, a professor from Shantou University, said the government should not interfere in matters of the Internet, as "Internet should be a free space." Fang held the opinion that the merger may have a negative impact on global Internet competition. He said that after Uber sells its China operation to Didi, the two companies could partition the global car-hailing market. He worried that two business magnates might rise in the wake of the merger.


Didi receives $600 million strategic investment from China Life

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Didi Chuxing announces that it has received about $600 million strategic investment from China Life Insurance. The investment includes an equity investment of $300 million and a long-term debt investment of 2 billion yuan. Meanwhile, the both parties will join hands in building a comprehensive partnership on Internet+ finance.

China Life Insurance is China's largest State-owned commercial insurance conglomerate, with the businesses including life insurance, property insurance, endowment insurance, assets management, alternative investment and overseas business. This investment is led by China Life Investment Holding Company Limited, the subsidiary of China Life. As a professional alternative asset investment platform, the asset scale managed by this company has exceeded 100 trillion dollars. In recent years, the company has supported actively the development of sharing economy, investing in many pioneering enterprises in new economy fields. This strategic investment means another heavy-weighted number has joined in Didi's string of Chinese investors. Before that, many renowned enterprises in China such as Tencent Holdings Ltd and Alibaba Group Holding Ltd had joined the the financing of Didi.

In addition of assets, Didi and China Life will join hands in developing innovative businesses for insurance, comprehensive financial services, market development and corporate mobility to build a safer and more diversified mobile riding financial ecosystem. The two parties will also collaborate on investment opportunities in mobile transportation and related fields in China and overseas.

China Life is the leader of Chinese insurance industry and the explorer of finance industry’s innovation development. The strategic cooperation of Didi and China Life will benefit the both parties in the long run. Taking advantage of China Life in capital, brand, financial product system and service network, Didi will provide users with more feasible reliable and enriched value-added riding service experience, said Liu Qing, president of Didi.

Wang Junhui, president of China Life Investment Holding Company Limited said, the combination of financial insurance business and Internet ecosystem is an important step for China Life to push the development strategy.

Didi is a technology enterprise with great innovative and executive powers, keeping absolutely leading position in the respects of product development, technology innovation and market expansion. The cooperation of both parties will complement with each other's advantages and activate the collaborate the network effect of each other’s network, exploring new industry development space for “Internet+ finance”.

Founded four years ago, Didi has held 300 million registered users and nearly 15 million registered drivers with the services covering taxi, private cars peer-to-peer rides, chauffeuring, bus services and other vertical fields. With the smart adjustment system driven by big data, Didi Chuxing has accomplished more than 14 million orders per day. According to the statistics of CNNIC, Didi has dominated 87.2% of the market share in China’s private cars. It is also a leader in ride-sharing, chauffeuring, and peer-to-peer rides, becoming the biggest mobile riding platform in China and the world.

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