With Chinese unicorns core businesses maturing, strategies have changed, and targets of successful expansions into their competitors’ dominant markets have set, all in the name of building a stronger ecosystem.
Meituan justified its acquisition of Mobike in the name of an ecosystem play, Didi, warranted its food delivery initiative, with the same rationale.
And just as Meituan-Dianping, the world’s largest O2O platform, started to dent Didi’s ride-hailing business by diversifying its services into the cities of Shanghai and Nanjing, the Chinese #1 ride-hailing giant, Didi Chuxing responds by launching its food delivery service arm, DiDi Foodie to Wuxi in early April and now is onto Nanjing by June this year.
Didi Chuxing announced on Thursday to bring its food delivery business to Nanjing, the capital city of Jiangsu Province on June 1, the second destination after Wuxi.
It hopes to replicate its success – delivering up to 334,000 orders by the end of the first launch day in Wuxi, an affluent city close to Shanghai, in this new venture.
On the flip side, with regards to China’s ride-hailing market, Meituan-Dianping has had overwhelming success early on, gobbling up over 30% in market share in the cities of Shanghai and Nanjing in few days after official launch, according to Wang Xin, founder and CEO of the company at a local forum in March.
Such is the extent of the escalating war between the two Chinese giants. Cheng Wei, founder and CEO of Didi Chuxing, has also once revealed to Chinese financial media Caijing that Didi might not be the strongest competitor, but it does not back down from a war with Meituan.
While WANG Xin, co-founder and CEO of Meituan, also said in pubic that it has prepared US$ 1 billion for the newly-launched ride-hailing initiative, with not upper limit in subsequent funding.
In light of the highly anticipated blood-bleeding price war and impending cash-burning expansions between two of the largest Chinese unicorns, Didi Chuxing has raised up to $20.1 billion in funding, whereas Meituan-Dianping has raised up to a total of only $8.3 billion to date. The latter’s rumored failure to raise funds from SoftBank, the world’s largest tech investor, seemingly posits that much larger fund support is required for its bold growth plans.
San Francisco-based Uber’s exit from China – is the perfect example of burn rates reaching unsustainable levels.
Rumors are circulating – both Didi Chuxing and Meituan-Dianping are expected to go IPO this year – driving home the point that only the giant public markets can sustain their aggressive ambitions.
Editor: Ben Jiang
