Editor’s note: This post originally appeared on TechNode, an editorial partner of TechCrunch based in China.
Didi Chuxing’s deal to acquire Uber China seemingly left the Chinese ride-hailing giant as the last man standing and therefore sole winner of China’s vast ride-sharing market. However, Didi’s success has also served to open new opportunities for other competitors. It would seem that there’s no way for a single company to gobble up the entire market as a whole, even if it’s Didi.
UCAR, a prominent rival of Didi in China, announced this week that it raised an initial RMB 4.6 billion ($670 million) in new funds from four investors including China’s interbank network, UnionPay. The company counts high-profile names like Warburg Pincus and Jack Ma among its roster of backers.
There’s more to come, however. Board chairman Lu Zhengyao told local media [Chinese] that the total financing will surpass RMB 7 billion ($1.02 billion) via additional commitments. He said the money raised will be used for marketing, recruitment, expanding its offline presence and increasing its fleet.
UCAR is no stranger to large investment deals. Last October it raised RMB 10 billion ($1.45 billion) via a private placement plan. Impressive though that is, Didi has the financial clout to blow rivals out of the water, as did with Uber China. Didi has raised more than $10.5 billion from investors, including its most recent $7.3 billion round which included input from tech heavyweights Apple, Tencent, Alibaba and SoftBank.
While Didi relies on private cars and crowd-sourced drivers, UCAR offers its services via an in-house fleet and licensed drivers. These drivers provide UCAR with a way to potentially increase margins and also, importantly, avoid government concerns around its legal status.
The firm currently operates four product lines: Car. Inc, its Hong Kong-listed car rental arm, Shenzhou Zhuanche, the chauffeured car service, as well as an online car marketplace and a car loan service. That’s quite a spread but CEO Charles Lu disclosed that the company is keen to venture into new areas. He said that all of its business units are on track to record a profit this year, and that car manufacturing is one possible expansion up for consideration.
Like many Chinese tech startups, UCAR is listed on the Chinese over-the-counter (OTC) market. It was the first of its kind when it was went public in September last year and is currently valued at RMB 40.93 billion, $5.95 billion. Didi has not gone public yet and no specific timetable for its IPO has been disclosed.
Despite the fierce competition and government constraints, local companies continue to fight their way into to China’s ride-hailing market. LeEco-backed Yidao is another upstart that is hoping to fill a gap once Didi completes its protracted acquisition of Uber China. Yidao itself completed a $700 million funding round at a valuation of $1 billion in 2015.
Beyond those services, China’s top local services firm Meituan recently added a car-hailing function to its app, while car manufacturer Geely has expanded its ride-summoning service Caocao Zhuanche to more cities.
Major mergers — like the coming together of Didi Dache and Kuaidi Dache in 2015 and the ongoing Didi-Uber China deal — left many predicting that the battle in China’s ride-hailing industry is over. UCAR’s news investment shows that while the market is more mature now, the war is not over just yet.