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Didi, Kuaidi to continue user, driver subsidies

2015-02-26 11:08 Global Times Web Editor: Qin Dexing

Didi Dache and Kuaidi Dache, China's two most popular taxi-hailing mobile applications, announced Wednesday that they will continue offering subsidies to users and drivers for a long time after their merger.

The two apps, which have merged, still require a large amount of subsidies to boost the nation's mobile transportation services, Liu Qing, president of the newly combined company as well as the president of Didi Dache, was quoted as saying in a joint press release e-mailed to the Global Times on Wednesday.

The comment was an attempt to soothe Chinese users who had been speculating on social media that the merger may put an end to the subsidies, which the two apps initiated in 2014 to compete with each other in the booming taxi-hailing market.

However, the subsidies given out by Didi Dache cannot be used on the Kuaidi Dache app yet and vice versa, according to Kuaidi Dache.

"The [technological] changes on the apps cannot take place overnight… the two apps will gradually integrate with each other in terms of database and structure," Ye Yun, public relations director of Kuaidi Dache, told the Global Times Wednesday.

Didi Dache and Kuaidi Dache now still operate independently, after saying on February 14 they would hook up to launch one of the world's biggest mobile platforms for on-demand transportation services.

Apart from taxi-hailing services, car-hiring services are also expected to be a promising segment. The firms have already launched car-hiring services, Kuaidi One and Didi Zhuanche, to take on the likes of US car-hiring firm Uber.

Uber unveiled a partnership with China's Internet powerhouse Baidu Inc in December 2014, aimed at tapping into China's growing car-hiring market.

In the face of increasingly heated competition at home, the merger will not stop the companies from sending out subsidies to drivers and customers, which is a common and effective way to woo more users as well as enhance user loyalty, said Zhang Zhuting, a professor at the Transport Management Institute under the Ministry of Transport.

But the lavish spending on subsidy marketing will not last for long, Zhang told the Global Times Wednesday.

To sustain their battle for a bigger share of the market, Didi Dache and Kuaidi Dache have received over $1 billion from private investors in recent months, according to media reports.

The merger of the two is seen as a move to terminate the fierce competition, allowing the two to save more money to improve user experience, Zhang Xu, an industry analyst with Beijing-based market consultancy Analysys International, wrote in a note e-mailed to the Global Times on February 14.

In response to concerns about whether the merged company would face an anti-monopoly investigation from Chinese regulators, Ye noted that Didi Dache and Kuaidi Dache have no need to submit a notification of concentration of undertakings to antitrust authorities, as they did not reach the filing threshold.

Zhao Zhanling, legal counsel of the Internet Society of China, told the Global Times Wednesday that the Ministry of Commerce still has the right to launch an antitrust probe over the deal even if the firms did not need to submit a notification of concentration of undertakings.

Data from Analysys International showed on February 13 that Kuaidi Dache led China's taxi-hailing market with a 56.5 percent share in the fourth quarter of 2014, followed by Didi Dache with 43.3 percent.

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