China’s ride-hailing giant Didi Chuxing announced the launch of a dedicated brand name to its high-end car-hailing service Didi Premier, Li Cheng Zhuang Che (礼橙专车), in its bid to further cement its already dominant market position.
In addition to a standalone brand name, the Premier service would also have its own app, separated from the main Didi Chuxing app to reinforce its high-end image.
The move, according to some industry observers, might also suggest that the Beijing-based ride-hailer is working towards its wide-tipped IPO which was rumored to happen later this year, especially as there has been a swathe of Chinese startups scrambling for IPOs in either Hong Kong or the U.S.
It’s a common practice for Chinese internet giants to spin off some its service offerings for independent development, especially when the companies envision a big potential for those services.
For instance, Chinese e-commerce giant Alibaba, for example, has established brands like Tmall (天猫) the B2C marketplace, Flying Pig (飞猪) the OTA, and Xianyu (闲鱼) the used items platform under its big name. Chinese internet company NetEase also has rebranded its ecommerce service as Kaola.
This year itself, Chinese O2O platform Meituan-Dianping and China’s OTA giant have entered the scenes, trying to acquire a larger slice of the nation’s ride-hailing market. The ‘long-time’ leadership of Didi hasn’t done enough to deter these incumbents, signaling escalating competition in an increasingly saturated market.
In addition to the local competition, Didi has also taken huge strides in its international expansions – first to Mexico and now even to Australia – facing another potent archrival Uber – this time with no ‘local knowledge advantage’.
Most importantly, towards the end of last year, in China’s luxury ride-hailing market, Didi’s competitor, Shouqi Limousine and Chauffeur, a Chinese car-hailing company backed by state-owned Beijing Shouqi Group entered into a strategic partnership with Chinese internet giant Baidu, boosting the startup to unicorn status, further intensifying the competition in a premium market that for now is tightly controlled by Didi.
This isn’t the first time Didi actually attempt to boost its position in the nation’s high-end car-hailing service. Back in 2016, the company already started talks to partner German automaker Volkswagen AG for a high-end car-hailing venture in China. Both companies are also looking to co-develop self-driving cars this year.