China’s ride sharing wars are eating up billions of dollars image

Chinese ride-hailing service Didi Kuaidi has decided to raise around $3 billion after the latest fundraising effort, according to sources that have knowledge of the proceeds, while the funding round at the Chinese division of international competitor Uber Technologies has gathered $1.2 billion.

The new cash piles are raising the stakes when it comes to the start-ups, forecasted as two of the most valuable such companies in the world. It also signals that investors are ready to pour large sums of cash into an industry sector that didn’t even exist a few years ago. They also look willing to let past practices that could actually be considered suicidal in other businesses – such as heavy spending on subsidies to increase market share and placing a wager that China’s newly formed Internet-based transport market would become the most valuable in the world soon.

Didi Kuaidi is the largest market share holder among car-hailing service providers in China, and back in July it announced it had gathered $2 billion, with prospects to gain another “few hundred million” because of major interest from worldwide investors. Meanwhile Uber chief executive officer Travis Kalanick also said the Chinese unit of the company took home $1.2 billion, including from local cash giant Baidu Inc. While the traditional auto market is showing signs of growing tired in conjunction with the latest economic and stock market woes, the ride-hailing sector is developing tirelessly, putting China up front to vindicate another world victory soon. And the stakes are high – Uber Technologies – the US-based company that is credited with taking the ride-hailing service mainstream has a market value of more than $40 billion, with local Chinese rival Didi Kuaidi now valued at $16.5 billion.

Via Reuters