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26-02-2014 | 17:14:18
Taxi-booking apps burning money to gain markets
Society

Two Chinese internet giants are dialing up the competition over taxi booking apps. Kuaidi Dache and DiDi Dache are two key players and both are giving more cash back to passengers -- in a fight for market share. Behind the app fight, it’s actually a battle between Tencent and Alibaba. Will the cash-burning race make them king of the market?

 

You can get 12 to 20 yuan off the fare if you book a taxi through Didi Dache now. That’s because the company raised its subsidy of taxi fares from 10 yuan yesterday. Drivers are making out pretty good, too. That’s because they now get an additional cash reward of 5 to 10 yuan on top of the fare for each trip booked through the Didi Dache app. Kauidi is keeping the pressure on by announcing that it will forever rebate one yuan more than its competitors.

 

Chen Jun, East China Director of Didi Dache, said, "We’ve invested 1 billion yuan into this round’s cash rebate. At this round we would like to develop user’s payment habit, in order to keep our market share."

 

What Kuaidi and Didi are both aiming for in their cash-burning duel is to become the market’s top dog. A recent survey shows that Kuaidi held 41.8% of the market in last year’s third quarter while Didi trailed slightly behind with 39.1%. Experts believe the small gap in market share stems from the companies’ differences in services. The experts also think that the key to victory will come down to good service rather than just cash rebates.

 

Internet expert Xiang Ligang said, "A sustainable way is to improve the product, and adjust the mechanism to better suit costumers’ needs. Only when a product’s value doesn’t lie with the cash rebate, can we say that this product has a future in the market."

 

Other voices predict that once the market war is over, all of the rebates will be withdrawn as the companies look to regain profits. But for now, the battle is on and Kuaidi and Didi are giving no quarter. They believe that only when they’ve secured their place in the market, can they talk about additional development.

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