Having gone on a free and easy trip to Shantou during the Easter holidays, I realized that I almost couldn’t find any taxis on the road. When I asked passersby where I could find a cab, they answered that taxis were pretty much ruled out of the market, thanks to Didi Chuxing (Didi), the car-sharing mobile application.
How was Didi able to replace taxis? It turns out that booking a ride with Didi costs about only 80 percent of what taxis would charge. Furthermore, thanks to the abundance of Didi cars, we found a driver who arrived at the pickup point in a minute. Payments are also made through Tencent’s mobile app WeChat.
Development of mobile technology in the Mainland has already surpassed that of Hong Kong. And it is no surprise that Alibaba, together with its affiliate Ant Financial has decided to acquire Ele.me, a major food delivery platform in China. The acquisition marks a new record for the largest cash purchase in China’s Internet history.
Constant acquisitions, growth, and monopoly are the keys to the rapid growth of Alibaba and Tencent. I myself have witnessed how the taxi industry has been “displaced” by Didi’s mobile applications.
China has a population of 1.3 billion people and despite the fact that there are countless entrepreneurs, every industry is on a path to being monopolised. In the space of mobile payments, Tencent and Alibaba are the duopolies in the industry.
After doing some research on Didi’s background, I found that this website/ web application has taken over 80 percent of the Chinese market. It even bought over Uber China last year. Two of the major shareholders behind Didi are actually Tencent and Alibaba.
There might be a day when we see Tencent and Alibaba merge, along with China’s internet search giant Baidu, forming the new company “BAT”.
Catch Dr Chan at Shares Investment Conference 1H2018!
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