{"id":64,"date":"2015-11-26T11:57:11","date_gmt":"2015-11-26T16:57:11","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/didi-kuaidi-chinas-car-hailing-market\/"},"modified":"2015-12-04T13:17:22","modified_gmt":"2015-12-04T18:17:22","slug":"didi-kuaidi-chinas-car-hailing-market","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/didi-kuaidi-chinas-car-hailing-market\/","title":{"rendered":"Didi Kuaidi & China\u2019s Car-Hailing Market"},"content":{"rendered":"

The traffic situation in many of China’s major cities is\u00a0well-known: queues of people line up as if at an airport, but instead outside of the most mundane locations such as restaurants, national and historical parks, and even business plazas. Public transportation is no better, as even squeezing onto a subway car or bus requires a level\u00a0aggressiveness bordering upon rudeness.<\/p>\n

Enter Didi and Kuaidi, two taxi-booking application-based companies that merged in February 2015<\/a>, in\u00a0an effort to head off Uber’s expansion throughout China. Their business model? Straight from the mouth of the President Jean Liu<\/a>:<\/p>\n

\"jeanliu-quote\"<\/a><\/p>\n

That is, Didi Kuaidi creates and captures value by developing and offering taxi\/carshare products that meet the unique demands of the Chinese people.\u00a0To this end, Didi Kuaidi has been\u00a0very effective at aligning the company’s business model and operating model. Specifically, two\u00a0major facets underpin its operating model, as it relates to its overarching business model:<\/p>\n

1. To meet the unique demands in China, Didi Kuaidi\u00a0listens to its customer base and its needs, and responds with corresponding products.<\/p>\n

While Didi Kuaidi started out as a taxi-hailing app, today, over half of its trips are\u00a0executed via the\u00a0private-car service.\u00a0This is an outgrowth of the extent to which Didi Kuaidi leadership responds to what it identifies as needs…it created a hitch product<\/a>\u00a0as a carpooling service for commuters who are already driving to and from work and want to make a little extra cash, and it created a higher-end chauffeur product<\/a>\u00a0to satisfy customers looking for a driver to ferry them around in their own vehicle. It even recently launched Didi Bus<\/a>, in which leased buses run a shuttle service between popular points of commute that are currently under-served by\u00a0public transport.<\/p>\n

All these products, while not necessarily specific only to the Chinese market, are\u00a0in response to the needs communicated by those living\u00a0in the sprawling, traffic-laden cities of China: where it’s impossible for the public transportation system to adequately service every route in a direct fashion, given the speed of change, the number of people, and the size of the cities.<\/p>\n

2. Didi Kuaidi also meets its customer base where they are already operating – on platforms such as WeChat, which boasts over 600 million active users. Through WeChat, customers can book taxis or other rides seamlessly<\/a> while chatting with friends and securing\u00a0tickets to an afternoon movie. WeChat enables Didi Kuaidi once again to give customers what they want (an unparalleled, smooth experience with all their travel needs, whether it be bus or taxi or chauffeur, in one place) while accessing feedback to customers’ needs.<\/p>\n

\"wechat\"<\/a><\/p>\n

Both of these aspects have led to Didi Kuaidi owning a considerable chunk of the\u00a0private car-hailing market, with 83% share<\/a> (versus Uber,\u00a0a far second at 16%). Thus far, Didi Kuaidi has been able to 1) respond more quickly than Uber, 2) offer more services across the spectrum of customer needs (from budget to high-end) on a single, integrated platform, and 3) leverage existing social networks (such as the traditional taxicabs and the WeChat platform) as a source of competitive advantage.<\/p>\n

\"didikuaidi-share\"<\/a><\/p>\n

Of course, questions remain regarding the long-term outcome\u00a0of the Didi Kuaidi versus Uber rivalry. Neither company is profitable, partially because of the large subsidies they are offering drivers\u00a0in order to stay competitive; efforts to phase them out have alienated their driver base<\/a>. Moreover, it is unclear how Uber’s position in second place will change\u00a0– given Uber is only available in 20-odd cities versus almost ten times that for Didi Kuaidi, it’s possible that over time (and with expansion), Uber could capture significant market share at the expense of Didi Kuaidi. As the Chinese private car-hailing market further matures, the evolution of these two companies will be interesting to watch.<\/p>\n

Sources:<\/p>\n

South China Morning Post: “Leading taxi apps […] to counter Uber’s advance in China” (February 2015) www.scmp.com\/business\/china-business\/article\/1713463\/leading-taxi-apps-kuaidi-and-didi-us6b-merger-counter-ubers<\/p>\n

Wall Street Journal: “Jean Liu Reveals How Didi Kuaidi Is Beating Uber” (August 2015) www.wsj.com\/articles\/jean-liu-reveals-how-didi-kuaidi-is-beating-uber-1438715398<\/p>\n

TechCrunch: “Didi Kuaidi, Uber\u2019s Biggest Rival In China, Launches Personal Chauffeur Service” (July 2015) techcrunch.com\/2015\/07\/28\/home-james\/<\/p>\n

TechCrunch: “China\u2019s Largest Taxi On-Demand Company Introduces Shuttle Bus Services” (July 2015) techcrunch.com\/2015\/07\/16\/didi-bus\/<\/p>\n

Venture Beat:”Uber\u2019s WeChat drama exposes the unique challenges of winning in China” (August 2015) venturebeat.com\/2015\/08\/24\/ubers-wechat-drama-exposes-the-unique-challenges-of-winning-in-china\/<\/p>\n

Tech In Asia: “Didi Kuaidi slaps down Uber, claims 83% of China\u2019s private car-hailing market” (November 2015) https:\/\/www.techinasia.com\/didi-kuaidi-uber-china-market-share\/<\/p>\n

Forbes: “Meet Uber’s Mortal Enemy…” (September 2015) www.forbes.com\/sites\/liyanchen\/2015\/09\/23\/meet-ubers-mortal-enemy-how-didi-kuaidi-defends-chinas-home-turf\/<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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