Baidu links up with Uber

Search engine giant, car-hiring firm eye growing China market

Search engine giant Baidu Inc unveiled a tie-up with US car-hiring firm Uber on Wednesday, aimed at China's growing taxi-hailing market dominated by rival apps backed by Internet titans Alibaba Group Holding and Tencent Holdings.

Without disclosing the actual stake that Baidu bought in Uber, Robin Li Yanhong, Baidu's chairman and CEO, told reporters at a signing ceremony at Baidu headquarters in Beijing on Wednesday that the strategic cooperation between the two firms goes way beyond the financial investment, unlocking the potential of tapping China's private transportation market.

Li did not confirm recent media reports that Baidu's investment in Uber might be worth around $600 million.

Uber currently has operations in nine cities across the country including Beijing and Shanghai, according to Uber CEO Travis Kalanick, who expressed confidence at the ceremony about better China opportunities for the latecomer that will be unleashed by the tie-up. The company employs drivers who serve as a form of private taxi for customers who contact them using Uber's app.

As of June, taxi app users had topped 49 million, accounting for 9.3 percent of the country's mobile Internet users, according to figures released in July by the China Internet Network Information Center.

The latest available data provided by Beijing-based consultancy firm Analysys International in November showed the country's taxi-hailing app accounts had hit 154 million by September, with Alibaba-backed Kuaidi Dache and Tencent-financed Didi Dache holding 54.4 percent and 44.9 percent of the market, respectively.

As of the third quarter of this year, Kuaidi Dache had expanded its presence to 358 cities, while Didi Dache coverage hit 300 cities, according to the consultancy firm.

With the deal, Baidu is set to get a boost in its online-to-offline (O2O) payment race with Alibaba and Tencent, both of which have poured money into their respective taxi-hailing app partners that serve to popularize their O20 options, Wang Jun, a senior analyst at Analysys International, told the Global Times on Wednesday.

As for Uber, its team-up with Baidu would help localize its services for Chinese users, said Wang, who noted that the US firm focuses on offering car hire and that there is a great potential for this market in China, while the taxi-hailing app segment has already been dominated by two local operators financed by two of Baidu's deep-pocketed rivals.

Kuaidi Dache also launched its proprietary limo service, Kuaidi ONE, in July. Didi Dache added car hire to its service portfolios by launching Didi Zhuanche in August.

When asked about the impact of the Wednesday announcement on the taxi app market, Ye Yun, PR manager for KuaiZhi Technology Co, the developer of Kuaidi Dache, also told the Global Times "it has nothing to do with Kuaidi's operations."

Ye also dismissed concerns over the domestic regulatory environment, which has been cited by some industry watchers as a potential hurdle to the growth of the car hire industry.

Kalanick, Uber's chief, who made his first public appearance in the wake of a rape case in New Delhi earlier this month that led to a ban on Uber's private taxi service in the Indian capital, also told reporters Wednesday the firm was not confronted by any "pressing regulatory issues" in the Chinese market.

Anita Yue, a 24-year-old graduate student in Beijing who has used Uber's services, told the Global Times on Wednesday that she was slightly worried about the problem of safety following the India rape case, but not too much.

"It was not Uber's fault, there are good and bad people everywhere."