Firms will pool drivers to cope with intensifying competition
China's leading car-hailing firm UCAR Technology Inc announced Thursday an agreement involving strategic cooperation with online car-hailing app Edaijia, in a joint effort to provide customers with high-quality services.
The companies will jointly promote the brand in the domestic market and seek cooperation in terms of capital, according to the press release sent by UCAR to the Global Times on Thursday.
UCAR and Edaijia will pool driver resources, the release said, and a premium driver training project will be launched.
"The cooperation will help the two companies to complement one another with the aim of creating the best mobile traveling service platform," Lu Zhengyao, president of UCAR, said Thursday at a briefing in Beijing.
Yang Jiajun, CEO of Edaijia, noted Thursday at the same briefing that Edaijia focuses on the safety of its riders and will continue to offer them good services to expand its market share.
Edaijia, which specializes in offering online designated driver services, has been focusing on the sector for four years. These services are usually aimed at people who avoid driving their own cars after a night out drinking.
Media reports said the agreement was reached because UCAR didn't have enough drivers to meet demand, while Edaijia had an ample pool of drivers. Experts said that the agreement would meet each company's needs and allow them to battle rivals jointly.
The services provided by Edaijia will be available in 298 cities nationwide with more than 200,000 registered drivers, according to Yang.
UCAR faces fierce competition from numerous rivals such as US-based car-hiring firm Uber Technologies Inc and Didi Kuaidi, backed by domestic Internet giants Alibaba Group Holding and Tencent Holdings.
In the second quarter, UCAR was the third-largest Internet car-hailing firm in the Chinese mainland with 466,520 active users of its car-hailing platform, after Didi Kuaidi with 3.59 million and Uber with 649,640, Analysys International said in a report in August.
Cooperation among car-hailing companies will become more common as competition intensifies, Zhang Shuang, deputy manager of the Internet research center of Beijing-based research firm CCID Consulting, told the Global Times on Thursday.
"Such cooperation will soon change the competitive situation in the industry," Zhang forecast.
Edaijia has encountered intensified competition from Didi Kuaidi, which launched designated driver services on July 28.
Edaijia aims to lower its operating costs and win more market share in this sector through sharing the platform with UCAR, Zhang said.
Unlike Uber and Didi Kuaidi's customer-to-customer model (C2C), which connects private car owners with riders, UCAR uses a business-to-customer (B2C) model under which it serves riders with its own drivers and cars, which are primarily from its main shareholder Car Inc.
"UCAR created a new way for the government to manage the car-hailing sector as the company has stricter rules to manage its drivers and is able to make good use of resources," Hu Dan, senior consulting manager at consultancy iResearch Consulting Group, told the Global Times on Thursday.
The cooperation agreement will play a vital role in making the sector more normal, Hu said.
Zhang said that given the market situation in China, UCAR's B2C model will lead to a more sound business environment than Didi Kuaidi's C2C model.
UCAR, which got listed on the Hong Kong stock market in fall 2014, secured $550 million in a second round of financing in September, after which UCAR was valued at $3.6 billion, a statement released in September by CAR Inc showed. And in the first round, which closed in early July, the company raised about $250 million, according to media reports.
