Meituan-Dianping to Launch Ride-Hailing Services in Shanghai

China’s ride-hailing companies are likely to ignite another price war

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Meituan-Dianping, the world’s largest O2O lifestyle platform, is poised to extend its ride-hailing pilot to Shanghai soon, according to an announcement we recently spotted on its dedicated Meituan Dache (meaning Meituan ride-hailing) app.

The announcement says the Beijing-based company is launching a ride-hailing service, which has secured over 200k registered users in a pre-launch campaign, in Shanghai soon.

Image credit to Meituan-Dianping.

Meituan-Dianping started its first ride-hailing pilot in the Chinese city of Nanjing last February, reporting 100,000 rides per day. The pilot was said to be expanded into more major Chinese cities including Beijing, Shanghai, Chengdu, Hangzhou and Xiamen.

However, the expansion plan hit a roadblock as Chinese authorities, in an effort to regulate the market, now only allow licensed companies to run ride-hailing businesses, meaning Meituan-Dianping for now could only operate legally in Nanjing and Shanghai where it has obtained a relevant license.

The Chinese ride-hailing battle was presumably settled after Didi Chuxing acquired Uber’s China operations in August 2016. And Didi Chuxing has grown significantly since then.

Per Didi data disclosed earlier this year, the China’s #1 ride-sharing company by market share runs over 7.4 billion rides for 450 million passengers across 400 Chinese cities in 2017, or 20 million rides per day. Existing rivals including Yidao, albeit giving considerable subsidies to acquire customers, only have a single digit market share.

That being said, new entrants like Meituan-Dianping are still likely to take a piece from a huge pie, thanks to their vast user base accumulated through decade-long operations.

Meituan-Dianping, a platform that covers everything from food delivery to ticketing, can introduce and integrate the ride-sharing service with its existing service offerings. As WANG Huiwen, chief of Meituan-Dianping’s ride-hailing business, believes, Meituan-Dianping has 250 million daily active users and 30 percent of them have needs for ride-hailing services, that’s 75 million potential users.

When asked about the upcoming competition, CHENG Wei, Didi’s co-founder and CEO, once told Caijing magazine:

“If you want war, you will get war. Meituan may not be the weakest, but it may not be the strongest either.”

Back in the day prior to Didi’s consolidation of the market, Didi, Kuaidi and Uber China were embroiled in a blood-bleeding price war to give incentives to drivers and discounts to passengers in an aim to lure away users from each other. The practice died down after Didi became the monopoly.

Image credit to Didi.

Read more: China’s Didi Inks Deal with 12 Car Makers to Launch EV Sharing Service

Now with new entrants entering the battlefield again, the industry might head to another price war. Meituan-Dianping already plans to attract users with steep discount and to entice drivers with a three-month fee waiver.

In addition, Meituan-Dianping isn’t the only Chinese internet companies eyeing Didi’s piece of the pie.

Mobike, China’s top bike-sharing company backed by Tencent, also looks to broaden its business scope in the lucrative transportation space, with the launch of its very own car-sharing service in Guizhou province.

Read more: News Flash: Meituan-Dianping Leads Mobike’s over USD 1 Billion Series E Round, Poised to Best Didi Together

Editor: Ben Jiang