Meituan Arranged Car-Hailing Service and Didi will Try Takeout Delivery Business

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Two Chinese online life service giants have stepped into the car-hailing business. Ctrip, a leading provider of travel services, launched car rental business together with Didi, Shouqi Group and AA Car Rent. At the same time, Meituan.com, a Chinese group buying website, launched a taxi service in seven cities.

Complete Life Service Business

Ctrip added tags for premium and car rental in the “transportation and tickets” column on its front page, providing car-hailing services from partners such as Didi. Meituan.com also added ride-hailing business in seven cities, such as Beijing, Shanghai, Chengdu, Hangzhou, Fuzhou, Wenzhou and Xiamen.

Analysts said it may be a new fight between the two giants of life services. Ctrip and Meituan are both life service providers. Both operate local life services, and hotels, tourism and taxi hailing are their inevitable targets. The present competition may be unexpected, but understandable.

Can Later-Comers Succeed?

Meituan.com is not targeting Ctrip, but Didi, as its rival. Although the group-buying Internet company announced the launch of its travel business this month, its opened taxi service in Nanjing 10 months ago. Taxi drivers have confirmed that Meituan.com provides preferential subsidy policies and charges intermediate fees that are less than half of Didi’s.

“There are more incentives for drivers,” said one driver, “And Meituan asks for lower fees, which may be an advantage.”

But some passengers see little difference in price between the two online hailing platforms.

Meituan.com’s move may have been intended “to catch up to get on the last bus of the Internet.” It is making clear preparations. The expansion of its ride-hailing business into seven cities is regarded as a sign of entering formal competition with Didi.

Li Jinlong, a car-hailing market participant and the co-founder of Dida Carpooling, said it was impossible for one company to take dominant position in car-hailing market. Competition is advantageous to the industry’s development, he said. “From the user’s point of view, Meituan is a platform connecting consumers with catering, and it is also reasonable for Meituan to derive some travel service. I think there will be more and more models in the current regulations,” Liu said.

Still Burning Money?

In fact, the two big unicorns of the Chinese Internet industry have never stopped fighting. Didi invested in Ele.me to compete with Meituan. Meanwhile, it is reported that Didi is developing a delivery service business. China Business Radio journalists contacted both companies, but neither would comment.

Liu said competition is conducive to market development, but the impact depends on market proportion. If a company has a limited market share, it won’t have too much stimulation and promotion.

“It depends on how much Meituan can grab in the ride-hailing market. Didi arrived at its present position by burning tens of billions of yuan. It remains unclear whether Meituan is willing to invest that much, and whether it has the ability to afford it,” Liu said.

This article originally appeared in CNR and was translated by Pandaily.
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