China’s dominant taxi-app provider invests in Uber rival

Uber’s chief rival in China has invested in its US competition in strategic show of strength

A taxi driver in China uses technology put together by by Didi Kuaidi - the app company which has recently invested an undisclosed amount in US firm Lyft

As competition between different ride-hailing and taxi app services heats up, the philosophy governing Didi Kuaidi seems to be “the enemy of my enemy is my friend.” According to The Wall Street Journal, the Chinese taxi-app company, which is Uber’s largest rival in the Chinese market, has invested an undisclosed amount in US firm Lyft, itself the biggest rival to Uber in the US.

Uber has pinpointed China as a key market for its operations

Uber has pinpointed China as a key market for its operations. In June, Uber CEO Travis Kalanick wrote a letter to investors claiming that “Simply stated, China is the #1 priority for Uber’s global team. After launching in Beijing nine months ago and now currently operating in 11 Chinese cities, Uber recently announced its intention to up that figure by 100. “When we started this year, we were about one percent market share,” Kalanick said, reports The Verge. “Today, nine months later, we’re looking at about 30 to 35 percent market share.”

However, it has faced stiff competition from Didi Kuaidi, the dominant taxi-app in China. The backing of Uber’s rival Lyft on its own turf by the Chinese taxi service, however, can be seen as part of a global alliance of such businesses against Uber. Softbank Capital is an investor in both Lyft and Didi Kaudi and has also recently invested in other Uber rivals such as 250m in funding to Southeast Asian GrabTaxi and $210m in India’s Ola in 2014.

The Asian taxi-app market is also seeing a wave of consolidations. Didi Kuaidi is itself the result of a merger between Didi Dache and Kuaidi Dache in early 2015, while Ola acquired TaxiForSure for $200m in March. “There is definitely more consolidation coming. Taxi apps are growing at an exponential rate, so it’s smart to take out candidates before they can steal market share,” Bradley Gastwirth, CEO at US advisory firm ABR Investment Strategy, told CNBC.

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