Chinese designated driver app eDaijia is cutting one fifth of their staff in an attempt to stay competitive, as market giants Didi and Uber expand aggressively.
According to multiple Chinese media outlets who cite an internal letter from the company’s CEO, Yang Jiajun, the company will be laying off approximately 20% of their staff to curb spending in the face of rising competition.
The source claims that eDaijia’s personnel have quadrupled since the beginning of 2015 as part of an all-out attempt to compete with market leaders. However the CEO now feels that their numbers are “bloated”, and that the company will have to streamline personnel in order to stay competitive.
2015 has seen China’s ride-hailing market become increasingly focussed on core players Didid Kuaidi and Uber China. Both companies secured multi-billion USD funding rounds over the summer in an attempt to grab an early market share in China. eDaijia’s latest funding round totaled $100 million USD in May, with an estimated market cap of around $800 million USD.
When eDaijia launched in 2011 they differentiated from large competitors by marketing themselves as a chauffeur service. Didi has since encroached on the space, by launching their own designated driver service this July called ‘Didi Chauffer’. At the time of the launch Didi claimed they would have the service running in more than 100 cities by the end of 2015.
In October this year eDaijia joined forces with UCAR, also known as Shenzhen Zuche, in a strategic partnership that allows them to share resources including chauffeur teams, databases and marketing costs. The recent round of layoffs has sparked debate as to whether the two companies are planning a complete merger.
According to the internal letter cited in media reports, eDaijia is working on comprehensive compensation for the redundant employees, most of whom are in the technology business development portions of the business.
China’s O2O and on-demand services have seen increasing rounds of consolidation in 2015, beginning with the merger of ride-hailing giants Didi Dache and Kuaidi Dache. The country’s largest tech names Baidu, Alibaba and Tencent have expanded aggressively into the area, heavily subsidizing their services as each hopes to dominate capital-rich sectors. For companies like eDaijia, having minimal cash reserves could spell disaster in a market that favors early acquisition tactics.