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1st LD-Writethru: China Focus: Chinese taxi-hailing apps announce merger

Xinhua, February 14, 2015 Adjust font size:

Chinese taxi-hailing apps Didi Dache and Kuaidi Dache announced a merger on Saturday after a year of fierce competition for market share.

Hangzhou-based Kuaidi and Beijing-based Didi will retain their own brands and business after the merger. Both firms' current CEOs will co-chair the newly founded company that analysts say could be valued at 6 billion U.S. dollars.

Saturday's joint announcement was short on details of the two firms' integration.

The two companies have been going head to head since last year in separate promotion campaigns to attract users with subsidies for both taxi drivers and passengers.

Didi and Kuaidi have received backing from Chinese Internet giants Tencent and Alibaba, respectively, allowing users to pay trip fares with their mobile payment apps.

Kuaidi holds a 56.5-percent share of China's taxi-hailing app market, while Didi accounted for 43.3 percent as of December, according to research consultancy Analysys International.

The two firms refuted concerns over a potential monopoly in the Chinese market after the merger, saying taxi-hailing services are only a small piece of a much bigger transportation market in China.

Despite their dominance in taxi-hailing services, Didi and Kuaidi are being challenged in ride-on-demand services by newcomers such as Beijing-based rental firm CAR and U.S. taxi and transport service firm Uber, which received an undisclosed amount of investment from Chinese search engine Baidu last year.

Kuaidi and Didi launched their own ride-on-demand services during the second half of last year. Both taxi drivers and private car owners have signed up, but the services have run afoul of regulators as some cities banned unlicensed drivers from giving rides at the end of last year.

China's Ministry of Transport also banned private cars from taking passengers for profit in January and ordered app developers including Didi and Kuaidi to only dispatch cars owned by taxi or car-rental companies for ride-on-demand services "out of safety concerns."

Both companies have received four rounds of financing. Didi's latest 700-million-dollar round of financing included funds from Singapore's sovereign wealth fund Temasek and Russian investment firm DST, while a 600-million-dollar investment in Kuaidi came partly from Japan's SoftBank and Tiger Global. Endi