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Competition Heats Up In China Between Uber And Didi Which Raised Funding Target to Over $1.5 Billion

April 8
3:59 AM 2016

Didi Kuaidi, Uber's largest competitor is about to raise its latest round of funding to more than $1.5 billion to compete with Uber Technologies Inc. China's largest hailing service will be valued at more than $20 billion in the round.

It's a battle between China's largest hailing service Didi Kuaidi and Uber Technologies Inc. as both companies provide large subsidies to drivers and passengers to sign up for their services. Didi received robust demand from new and present investors and is expecting the round will be completed at the end of April.

Several global startups which include some in Silicon Valley have difficulty raising money during the economic slowdown, but now Didi Kuaidi. Its value surged from just $6 billion in February last year when it was established from the partnership of two competing taxi-hailing companies.  Investors wager that the company will be able to generate a profit after drawing more Chinese passengers to its service, reports The Wall Street Journal.

Didi is backed up by largest investors including social-network company Tencent Holdings Ltd. and online shopping titan Alibaba Group Holding which lately surpassed Wal-Mart as the world's biggest retail company.

Uber however, is not a couch potato.  It is valued at more than $60 billion and has overthrown rivals in Europe and the U.S. has its own resources to draw from and has its ceaseless ways to find new strategies in battling its rival. Its backers include the country's largest insurer China Life Insurance and Baidu Inc. which is its major internet provider.

It is producing $1 billion in annual profit from its 30 largest cities worldwide, money that puts it in a position to fund its Chinese investment. Didi Kuaidi on the other hand, has the home court advantage, according to a Bloomberg report.

"We will be the last one standing," Vice President of Strategy Stephen Zhu told the Credit Suisse Asian Investment Conference in Hong Kong. "Why is our competitor consistently 20 to 30 percent cheaper but still failing to gain market share? It's because the customer experience is not as good, their network is much less than ours."

In China, it will be between Uber and Didi. One of the more distinguishable and possible obstacles these ride-hailing companies will face are local regulations, according to Livemint.

It's a battle for drivers and passengers for Uber and Didi as they try to ousts one another by giving large subsidies and raise billions of dollars for expansion and competition in the market.

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