Bottom line: Car Inc’s hired car services unit’s $5.5 billion valuation on China’s New Third Board is hugely overinflated, while Yidao’s new clash with Tencent shows the regulator needs to become more active in oversight of WeChat.
Two of China’s second-tier hired car services providers are in the headlines heading into the weekend, as these smaller companies fight an uphill drive to attract attention away from industry giants Didi Chuxing and Uber. The larger of the 2 stories has the hired car services unit of car rental leader Car Inc (HKEx: 699) receiving approval for a listing on China’s over-the-counter (OTC) New Third Board, valuing the company at a hefty 37 billion yuan ($5.5 billion). The second story has Yidao getting in a tussle that has seen promotion of its services blocked on Tencent’s (HKEx: 700) wildly popular WeChat platform . Read Full Post…
Bottom line: Shanghai’s announcement of formal regulations for hired car services will finally provide legal status for Uber and Didi-Kuaidi, and will be followed by similar policies in other major Chinese cities.
Uber closer to legal status in Shanghai
Just a week after Beijing held a highly unusual meeting of 8 government agencies to discuss the oversight of private car services, China’s commercial capital of Shanghai is sending its own positive signal to this fast-growing group of companies led by US giant Uber and the homegrown Didi-Kuaidi. That signal comes in the form of a newly issued set of rules and regulations that hired car service providers will need to follow to gain formal legal status and remain in compliance with the law. (Chinese article)
This particular move looks incremental but also quite significant, since Shanghai is often considered a leader in developing and regulating new industries in China. In this instance we can probably assume the city was acting under directives from the central government, meaning Beijing has officially decided to support development of private hired car services that compete with traditional taxis. That means we can probably expect to see other major Chinese cities follow soon with their own similar guidelines, ending a period of regulatory uncertainty for Uber, Didi-Kuaidi and other smaller rivals. Read Full Post…
Bottom line: Didi Kuaidi is likely to launch service in the US next year, while Uber’s decision to spin off its China operations shows its commitment to the market, as the rivalry between the pair intensifies.
Didi Kuaidi eyes US
A major global rivalry is shaping up between US hired car services pioneer Uber and its Chinese alter ego Didi Kuaidi, which both have extremely strong backing and are attracting billions of dollars in new funding. Just days after Didi Kuaidi was reportedly on the cusp of raising up to $2 billion in new money, media are now reporting the Chinese company has quietly begun hiring in the US for a move onto Uber’s home turf.
At the same time, Uber’s aggressive CEO Travis Kalanick has been quoted saying he’s planning to spin off his China business into a separate company. That move would be unique for Uber in its global strategy so far, and is aimed at better challenging Didi Kuaidi on its home turf. Uber also hopes the plan will allow it to respond more rapidly in a market that’s both extremely lucrative but also quite unique and challenging. Read Full Post…
Bottom line: Uber should consider forming closer alliances with local city governments to boost its chances of survival in China.
By Jeffrey Towson
Uber struggles in China
Hired car services giant Uber is now in the situation you never want to be in in China: a foreign company on the wrong side of both the government and powerful local competitors. Ask Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO) how that worked out. However, Uber can still win in China. They have one last move that could reverse the situation. They can do what homegrown rivals Kuaidi and Didi won’t. They can ignore the advice of Alibaba (NYSE: BABA) Chairman Jack Ma and marry the government.
Ma has famously said “Never, ever do business with government. Love them. Don’t marry them. So, we never do projects for government.” Compare this to statements by Kuaidi’s CEO Joe Lee, who said “One thing we learned is if we want to grow fast, we need to make sure the government supports us. Because in China, they can stop you in one day — they shut down your server and you’re out.” Read Full Post…
