Meituan launches ride-hailing service in Shanghai to challenge Didi

Shanghai (Gasgoo)- Chinese e-commerce giant Meituan officially launched its long-rumored ride-hailing service on March 21 in Shanghai. Reportedly, Meituan has raised a minimum capital of $ 1 billion to meet the challenge from Didi, the currently China's largest ride-hailing platform.

While Meituan is diving into the area that is heretofore dominated by Didi, the ride-hailing giant is reportedly working on launching its food delivery service that is one of Meituan's core businesses. According to local media, Didi has started a RMB 10 billion ABS financing round which seems to challenge with Meituan's aggression. 

As a latecomer in the industry full of fierce competitions, Meituan joins this area with a huge subsidiary plan. In Najing, the first city where Meituan launched its ride-hailing service, the registered drivers only need offer an 8% commission fee to the platform which is much lower than that of Didi (20%).What's more, the drivers registered in Shanghai are exempted from being charged commissions during the first three months. 

According to Wang Huiwen, Meituan Dianping's senior vice president, among around 250 million active users on its platform, 30% consumers have the travelling needs that usually happen after they finish their group-buying on the platform. Thus, it creates a huge potential for the company to promote its ride-hailing service.

Besides, Meituan is very popular among third and fourth tier cities in China where people tend to choose taxi as the preferential option. Besides, the subsidiaries offered by Meituan will be pretty attractive to people living there who much treasure their money. 

According to the list of global tech startup “unicorn” released by the CB Insights, both Meituan and Didi ranked among the top 10 companies with their valuation exceeding $10 billion in 2017. It may shows that Meituan has the strength to challenge Didi in ride-hailing field. 

Nevertheless, the good service and reasonable price are crucial things consumers concern. Since Didi became the winner in the former subsidiary battles, it has gradually taken back the preferential subsidiaries from consumers and drivers. In fact, summoning a vehicle on Didi's platform will cost nearly same as that of using a taxi. In addition, more and more drivers are giving up using Didi, while Meituan's ride-hailing service are providing consumers with another available option.