Lu Zhengyao, Board Chairman of Shenzhou Zuche (L) & Yang Jiajun, CEO of eDaijia (R)
Instead of a rumored merger, the tie-up will take the form of investments, sharing mutual user database, API, chauffeur teams and marketing resources. More details of the deal will be confirmed later.
Its yet another match-up between Chinese giant platforms, as O2O giants look to consolidate in a tough market. Didi-Kuaidi, 58.com-Ganji, and Meituan-Dianping mergers have been the defining partnerships in China tech this year.
However, it is worth nothing that there’s something different about the UCAR-eDajia partnership
The three previously mentioned mergers are marriages between similar services looking to edge out competition. In UCAR and eDaijia’s case, the two partners come from different, but closely related verticals to create synergy effects along the industry chain.
Founded in 2011, eDaijia is a ride-hailing app linking users with chauffeurs to drive you home after a night out. The startup claims to have registered over 200,000 drivers and provides services in nearly 300 cities across the country.
On the other hand, Shenzhou Zuche, the chauffeured car arm of car rental service CAR Inc., is equipped with large in-house car fleets. The company claims to see over 300,000 daily transactions, with ten million users spread throughout 60 cities. The cooperation would combine eDaijia’s driver team with Shenzhou Zuche’s vehicle resources as well as the user base and technical teams.
After years of tough competition, China’s mobile transportation sector is now dominated by three powerhouses of Didi Kuaidi, Uber and Shenzhou Zhuanche. Although Shenzhou Zuche is catching up quickly, it still lags far behind the two competitors in terms of market share.
The company is now feeling more pressure as both Didi-Kuaidi and Uber are making exciting advancements in the car-hailing race. Didi Kuaidi last week acquired the first licenses to run private-car-booking service in Shanghai. Uber announced on the same day that it has registered in Shanghai Free Trade Zone and plans to add $1 billion USD for a China push.
Despite the stiff competition, eDaijia leads the private driver market with 70%-90% market share, though Didi Kuaidi rolled out a similar service this July.
UCAR just snagged a $550 million USD B round led by their parent company, while eDaijia received a $100 million D round early this year. Local media reported that Warburg Pincus, a shared investor of both companies, played an active role in forming the partnership.
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