Uber will continue to “invest heavily” in China after the country’s biggest taxi sharing apps Kuaidi Dache and Didi Dache confirmed a merger.
The tie-up creates a business worth an estimated $6 billion, and creates a virtual monopoly in China.
A report from Analysys International in December last year is the basis for this observation. Based on a market size of 154m app downloads, Kuaidi has a 54.4% share of the Chinese market and Didi 44.9%.
The release said that both brands will continue to operate independently.
The levels of investment and the companies involved in the Chinese taxi app market are huge. Kuaidi is backed by Alibaba and its last confirmed funding round came in at $600 million. Japanese IT giant SoftBank Group and investors Tiger Global also contributed to this cash injection.
An Alibaba spokesperson said: “As a shareholder in Kuaidi Dache, Alibaba Group is supportive of this merger as it will promote the healthy development of the taxi-app and expand city travel options for users.”
Didi Dache meanwhile is backed by TenCent and picked up $700 million this January. The Series D round involved Singapore’s Temasek Ventures and software business DST Global.
A source suggested to Tnooz that “that this proposed merger is all about stopping the hemorrhaging of all that cash that the two companies have been suffering in their ferocious competition.”
And some Chinese tech wires are reporting the Kuaidi/Didi tie-up in terms of an unlikely working relationship between Alibaba and TenCent
Elsewhere, China’s other internet giant Baidu is also involved in the taxi app sector. In December it announced “a strategic investment and co-operation agreement” with Uber.
An Uber spokesperson told Tnooz:
[We] remain committed to serving the Chinese market…What we saw today is proof of an ever-growing market segment that is offering riders more choice, and drivers more economic opportunities, so we look forward to continuing to be a key part of this community.
Our dedicated local teams stay deeply focused on the expansion of our business in China, especially with the help of great strategic partnerships such the one with Baidu.
China is a key focus for us, and we will continue to invest heavily on our success there. That includes hiring great talents to take our business forward across China.”
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