BEIJING, May 7, 2015 /PRNewswire/ -- Beijing, the capital of China, the picturesque Haidian District has always been attracting the attention of the world with its distinctive features. As the center of politics during the period of Ming and Qing Dynasty, the world-famous Summer Palace, the Old Summer Palace, Xiangshan Mountain and Yuquanshan Mountain are located in Haidian District. After the new China was founded, more than 200 top national academic institutes and research institutions such as Tsinghua University, Peking University, CAS (Chinese Academy of Sciences), CAE (Chinese Academy of Engineering) gathered here. A large number of talents are cultivated; after the reform and opening-up policy in early 1980s, many high-tech enterprises such as LENOVO Group, Baidu and XIAOMI were established here and then reached out to the world.
With more than a hundred of start-ups, university science parks and industrial bases such as the Z-Inno Way, Tsinghua Science Park, Peking University Science Park, ZPARK Software Park and YONGFENG BASE are located inside the ZPARK Haidian Science Park and act as the home of start-ups and innovation. They are assisted by more than 100 active domestic and foreign venture capital investment organizations such as IDG, West Summit Capital, Northern Light Venture Capital and HONY CAPITAL that also use the Park as a base.
Haidian Science Park, hailed as "China's Silicon Valley," has seen the birth of numerous science-and-technology enterprises and also witnessed the rise and decline of many entrepreneurial teams. In ZPARK Haidian Park, amazing entrepreneurship stories such as Didi Taxi, Lagou and Angelcrunch increase every day.
Zhongguancun Haidian Science Park: helped Didi Taxi become the company starting with eight hundred thousand dollars and booming to ten billion dollars
Didi Taxi was established in ZPARK Haidian Park, Beijing, registered on September 9th, 2012. The products of this company was developed based on an App, which today provides convenient Internet-friendly taxi services to over 100 million users. That means Didi Taxi operates the largest taxi service software platform in China. On the Valentine's Day of 2015, Didi Taxi and Kuaidi also announced a strategic merger, combining the operations of both quantities of taxi service in China. The new company will compete with local rivals like Uber and Easy Go.
Recently, Wang Gang, the former Alibaba executive and an angel investor of Didi Taxi, explained how Didi has been successful. He suggests that, Didi has combines the advantages of "Alibaba's talents, Baidu's technology and Tencent's money, while growing up to a mobile internet company with the capital growth from the eight hundred thousand dollars to ten billion dollars in three years by relying on Zhongguancun Haidian Science Park."
As for the reason to create taxi software in this case, Wang Gang said: "there are three main reasons. In China, taking a taxi becomes the mainstream demand, but it is hindered by some difficulties; there is a similar pattern abroad, for example British taxi application Hailo just got the financing. Its development direction is feasible, but we cannot copy it completely; the attribute of mobile phone positioning distance becomes more and more important with the arrival of the Internet."
Didi has been influenced by Alibaba in essence, so they used some experience to create a software. Therefore in the early start, Didi insisted on four principles: No illegal taxis, no casual fares, no accounts, and no hardware. Gradually, Didi has become the taxi software with the highest coverage in Beijing, meanwhile Didi started the round B investment and it has been chased by many VC fans, including Tecent.
"Thanks for the efforts and matchmaking of Peng Zhijian, vice president of Tencent and Managing Director of Tecent Collaboration Fund. The representative of Didi Company has a chance to visit Mr. Ma Huateng, who has basically agreed with most terms in our document, including the company must develop independently without individual controlling, but he wants to hold more shares of our company." said Wang Gang. Kuaidi has received the investment of Alibaba Group in this case. Therefore it means Didi became more passive. What's more, our superiority is offline, so if we lose this opportunity and the abundant strategic resources of Wechat, which has successfully occupied a large part of market, will be taken up by others if Tencent decides to find other partners. We need a powerful partner to face the uncertain policies, because grasping the competition is the most important task. Finally, we won the investment of Tencent."
"Kuaidi Taxi, the largest taxi company in Yangtze River delta, was founded in the same period as Didi. After the investment from Tencent, we started a competition with Kuaidi Taxi quickly. After switching to WeChat payment at the beginning of 2014, Didi held a promotion in the form of subsidies bringing a surge of turnover in a week with billions of dollars of subsidies. However, the surge in data puts heavy pressure on Kuaidi. Before the end of subsidies, Kuaidi joined the battle along with Alipay, it started to offer subsidies both to passengers and drivers. Because of the cancelation of subsidies, the situation has been reversed, the trading data of Didi dropped sharply." Wang Gang said.
The following story is familiar to us, in which the price war between Didi and Kuaidi became fierce. At the end of February 2014, Ma Yun wrote an article about the drawback of taxi software, as he said taxi software made taxi impossible in his family. Quickly seizing the opportunity, Didi had a positive response, so the subsidy war ended. However this price war also foreshadowed the merger of Didi and Kuaidi.
After Didi's F-round financing of nearly 700 million dollars, Kuaidi also got the same amount of investment. After the financing of two sides, there happens a tightly changes. As for this issue about whether continue fighting with each other or to become reconciled to confront together with other competitors, the two sides began to carry out a more sincere communication. After financing at the same time, the attitude of Alibaba and Tencent becomes more open. Although strategic demands are different, it is more likely that these two companies would be merged. The management team has a more tacit division of labor and the financial investors are happy to see this change.
"Finally, Bao Fan, the best matchmaker in Chinese Internet field and the founder of Huaxing Capital, becomes the middleman to promote the uninterrupted formal negotiations." As Wang Gang said, "we all know the end of the story. On Valentine's Day in 2015, Kuadi Taxi and Didi Taxi announced mergence. Owing to the fact that the traffic market in China has embedded with so much innovation and opportunities. Both Kuaidi and Didi have to face their common enemy. After the alliance of Didi and Kuaidi, all of our shareholders, including strategic shareholders, have very high expectations and blessings for our new company, this new company will become one of the most powerful participants in the market. The journey of 'good travel' begins now."
For more articles about these and other industries, please see Forbes China at http://www.ForbesChina.com. For the complete interview, please visit: https://www.dropbox.com/s/vbq0ett21sn0jgh/WangGang.pdf?dl=0
Excerpt from: Forbes China
Author: Li Hao
Issued in: February 2015
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