US car-hailing firm Lyft joins forces with China's Didi Kuaidi

TOP: Lyft co-founder and president John Zimmer. ABOVE: Didi Kuaidi president Jean Liu. The partnership will allow Lyft users travelling in China to have access to the Didi Kuaidi app, while Didi Kuaidi clients will have the option to use Lyft's servi
The partnership will allow Lyft users travelling in China to have access to the Didi Kuaidi app, while Didi Kuaidi clients will have the option to use Lyft's services in the US (above).MAIN PHOTO: NEW YORK TIMES
Lyft co-founder and president John Zimmer.
Lyft co-founder and president John Zimmer.
Didi Kuaidi president Jean Liu.
Didi Kuaidi president Jean Liu.

SAN FRANCISCO • Car-hailing company Lyft has announced a partnership with China's largest ride-hailing company, Didi Kuaidi, that allows each company to serve the other's passengers and aligns them against a common competitor: Uber.

Lyft users travelling in China will have access to the Didi Kuaidi app and Didi Kuaidi clients will have the option to use Lyft's services in the US, company executives said at a joint press conference in New York City on Wednesday.

Didi Kuaidi president Jean Liu said the partnership, which goes live early next year, opened "a brand new era for the global rideshare industry".

Lyft co-founder and president John Zimmer said Didi Kuaidi invested US$100 million (S$140 million) in the San Francisco-based company as part of a financing round led by Japan's Rakuten earlier this year that also included activist investor Carl Icahn, Alibaba Group and Tencent Holdings.

The two firms will take advantage of each other's knowledge of local regulations - especially important in China, which has stymied many tech companies' attempts to enter that market - and share new technology and products.

The partnership gives both companies their first opportunity to serve passengers from overseas markets.

The partnership is perhaps the clearest sign yet of the race to conquer different parts of the world in the global ride-hailing industry.

The handful of major companies in the business of providing car rides have raised giant sums of money - some into the billions of dollars - and are using the money to open in new markets and release new product offerings.

The French ride-hailing service BlaBlaCar also said on Wednesday that it had raised US$200 million, primarily from US investors, which valued the company at US$1.6 billion.

Nearly all of these companies have their eye on Uber, the huge on-demand ride company that has raised more than US$7 billion in venture capital and is valued at more than US$50 billion. Over the last five years, Uber has exploded in growth to more than 300 cities across 60 countries.

China, in particular, has recently been a hotbed of contention and competition for ride-hailing startups. Uber has earmarked more than US$1 billion for its aggressive push into Asia - and particularly China - and is spending millions in subsidies to attract drivers and riders to its service with lucrative promotions.

Still, Uber's presence in China is dwarfed by that of Didi Kuaidi, which controls 80 per cent of the overall ride-hailing market in China.

Lyft, the No. 2 US service and operating in about 65 US cities, has delayed expanding internationally, despite saying in early 2013 that it would be a global service by the end of the following year.

Mr Zimmer said the partnership allows Lyft to bring its app to international travellers while focusing its resources on important domestic markets, such as New York City.

"Our calculation for the Chinese market is that this is absolutely the winning strategy," Mr Zimmer said in a phone interview following the press briefing.

Other companies cannot match Uber's coffers. As Uber tackles the world alone, analysts say the remaining companies will look to each other.

"I wouldn't be surprised if GrabTaxi and Ola were also part of this partnership to bring India and South-east Asia into the mix," said industry analyst Aswath Damodaran, a professor of finance at New York University's Stern School of Business.

REUTERS, NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on September 18, 2015, with the headline 'US car-hailing firm Lyft joins forces with China's Didi Kuaidi'. Print Edition | Subscribe