Uber’s battle in China continues, after previously revealed that Uber is losing more than $1 billion per year in China due to competition from Didi Kuaidi, the biggest local ride-hailing competitor. New challenge comes to surface as Didi Kuaidi plans to raise at least one billion in its latest fundraising round.
The new financing would value Didi Kuaidi at more than $20 billion, according to Bloomberg. The company was founded in 2015 from a merger between Didi Dache and Kuaidi Dache, backed by Tencent and Alibaba respectively. Before merging, the two Chinese companies had a fierce price war over local market share and both had significant losses in 2014. As Uber entered China in 2015, a new war started between Didi and Uber. Particularly since the beginning of this year, the two have been spending a huge amount of their funds to subsidize promotions and discounts for drivers and customers in order to gain market share.
Didi Kuaidi, currently operating in more than 400 cities, has the largest market share of ride-hailing apps in China with 83.2% market share in Q3 2015. The new funds would allow the company to have more cash to defend their dominating role in domestic market. On the other hand, UberChina raised $1.2 billion last year at a valuation of over $8 billion and is now seeking to expand to 100 Chinese cities by the end of 2016. Compared with Didi, whom backed by many big game companies, UberChina is backed by the Baidu, China’s biggest internet search company.
According to people familiar with the matter, Didi’s new funds would also be spent in developing advanced technologies such as “Big Data” and driverless technologies.