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Didi Dache vs. Youbu (Uber) vs. Yidao Yongche | Battle for China’s car service market

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Didi Dache vs. Youbu (Uber) vs. Yidao Yongche | Battle for China’s car service market

Having arrived in China less than two weeks ago, I have already used the three most popular car service apps in the Kunming, Yunnan province. Youbu (Uber) launched less than a week ...

Having arrived in China less than two weeks ago, I have already used the three most popular car service apps in the Kunming, Yunnan province. Youbu (Uber) launched less than a week ago on June 27th, 2016 and had drivers anticipating with excitement with yet another application to add to their smartphones. Youbu is coming in strong offering 50% off rides up to a maximum of 20Yuan in savings, and while this may be a temporary promotion by Youbu to capture the loyalty of drivers, loyalty seems to be the last thought on anyone driver or passenger’s mind. Everyone we encountered had each app simultaneously open seeking the closest riders and best promotions respectively. The fight between the car service applications to burn the most cash in anticipation of capturing drivers and passenger market share is at an all-time high, yet tangible results are still absent.

For context, see the below promotions currently being offered by the car service applications:

  • Youbu – offering 50% off up to a maximum 20Yuan savings
  • Didi – offfering 39% off up to a maximum of 20Yuan savings
  • Yidao – offering a 100% match rate for deposits on the app until June 30th 2016, and 50% match rate thereafter

*All promotions are constantly changing and represent information received from speaking to drivers as of July 2, 2016.

The most aggressive seems to be Yidao’s promotion, which begs the question, “how can this sustainable?”. For context, on Yidao’s application, you can buy deposit cash into the application in which they will match your cash deposit by the amounts stated above. Depending on when you submitted your deposit, you will have either a 50% discount or 33% discount. My parents each deposited $1000Yuan, before June 30th which was immediately matched as promised, showing a $2000 credit in each of their accounts. Given average rides cost ~20Yuan, and rides are taken on average 3 times a week, this should last my parents over 33 weeks each…The only reasons this could make sense is that Yidao must be either wisely reinvesting the unused rider’s cash or significantly increasing the number of rides being taken at their higher take rate to sustain these types of promotions.

To understand the necessity and cutthroat battle for China’s rider market, one has to also understand who is pulling the strings. From an Asian perspective, Youbu is backed by Baidu, Didi is backed by Tencent and Alibaba, and Yidao is backed by LeTV. Of the both financial and strategic backers noted, Tencent dominates without question. Tencent owns China’s most widely used chat and messenger application, WeChat, which is quickly becoming a staple hybrid application used for payment services.

WeChat only allows for payment on Didi Dache and one can also only call Didi Dache from within WeChat’s application.

This puts Youbu and Yidao at a significant disadvantage given the extra steps needed to call a car service outside of Didi. Also, as credit and debit card penetration is still novel for Chinese riders, the need to enter card information into yet another application poses another perceived inconvenience and security risk to riders.

The above also doesn’t mention North American relationships with Didi like Lyft’s ride-sharing agreement with Didi, and Apple’s recent massive $1bn investment. Travis Kalanick recently mentioned that Youbu was losing $1bn a year in China but the sheer number of car service transactions is too enticing for them to give up just yet. Didi firmly controls the Chinese market currently and clearly has the upper hand, but only time can tell who will be the last car driving.

Regardless, in the meantime, Chinese riders should have nothing to complain or worry about as they continue to reap the benefits of non-stop car service promotions and discounts.

To be continued….

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Food – Since I’m in Kunming, only appropriate to introduce you to GuoQiaoMiXian (Crossing the bridge noodles), incredibly scrumptious, see if your town has it!

BasketballKEVIN DURANT COMING TO THE BAY! Very excited about the next season 🙂

Music – Great new song by Dreamers Delight, “Pluto”. Trance like and deep and powerful contrasts. Spotify

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Comments ( 2 )

  1. WHR
    Enjoying the blog/podcast thus far! I studied in Kunming from 2011 — 2012...Working in Hong Kong this summer. Let me know if you come this way, and I'll buy you a beer. Take care.
    • Alan
      Hey Will, thanks for the note! I am currently in Beijing and won't be headed to HK this year but maybe next time :) Cheers!

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