Didi Kuaidi, China's largest mobile-based car-booking company, added a designated-driver service to its platform on Tuesday, a move that is expected to ignite fierce competition in the growing transportation service sector.
Now worth an estimated $15 billion after its latest fundraising of $2 billion in early July, officials said the company will launch the new service, Didi Driver, in 10 major cities immediately, including Beijing, Shanghai, Guangzhou, Guandong province, and Xi'an in Shaanxi province.
It is scheduled to roll out in another 15 cities by the end of August and expand to cover more than 100 cities by the end of year, according to Cheng Wei, Didi's chief executive officer.
Cheng said the company is aggressively branching into new sectors to build itself into a one-stop transportation service provider, despite being frequently criticized by transportation authorities for violating exit regulations.
"We have confidence that we can change the way Chinese travel," he said in Beijing.
Designated driver is the fifth service Didi has launched on its application.
Earlier this year the company, which built its empire on taxi-hailing services, integrated private cars, carpooling, and chauffeur services into its app.
Fu Qiang, general manager of Didi Driver, said the designated-driving sector has huge potential in China and is estimated to be worth about 2.69 billion yuan ($433.3 million) this year, around one tenth of its current size in South Korea, for instance.
"The population and number of vehicles in South Korea are much smaller than in China.
"The reason for the still-nascent market here is the lack of awareness in designated driving and the lack of an industry-wide service standard," he said.
Experts and analysts now expect Didi's foray into the new sector to act as a catalyst for the entire industry.
Wang Xiaofeng, an analyst at Forrester Research Inc, said that transportation services are a "rigid demand" of urban life in China.
"Designated driver may be something new to Chinese users, but Didi can easily boost the new business as its platform-model business already has 200 million existing users," she said.
Fu insisted its biggest advantage in the market lies in its huge number of drivers, whether taxi drivers or private license owners.
He said that 1 million out of the 5 million drivers on Didi's platform have already signed up to provide the designated-driving service.
"We will choose the most experienced drivers out of the group and give them proper training to provide high-quality services," said Fu.
Zhang Xu, an analyst with Analysys International, expects Didi to take a big slice of market share from existing players in designated driving as a result of the launch.
"With the huge amount of investment Didi just landed, a price war seems unavoidable," he said.
Beijing-based Edaijia, a designated-driving company which claims 90 percent of the Chinese market, insisted it did not fear Didi's latest move as the company founded in 2011 has already built up an entire system to manage, supervise and train its drivers.
"We work with 150,000 drivers across 200 cities in China and receive 200,000 orders every day," the company said in an emailed reply to China Daily.