Caocao raises 1 billion yuan in hotly contested car-sharing market
Ride-hailing service Caocao, developed by China’s Geely Holding Group, has raised 1 billion yuan in Series A financing two years after it was established in Hangzhou City of Zhejiang Province.
Geely Holding Group, owner of automaker Geely Automobile Holdings, said in a statement that Caocao, now available in 17 cities with 12,000 new-energy Geely Emgrand EV vehicles in use, has provided travel services to nearly 10 million customers.
The statement did not disclose the investors, except to say they are from both China and abroad. The injection of new funding, which pushes its valuation to over 10 billion yuan, will help Caocao start services in Shenzhen, Chongqing and other cities.
They statement also said Caocao has achieved breakthroughs in people-car connections to allow communication with drivers through an app as well as vehicles. Caocao plans to make use of aided-driving and self-driving technologies by Volvo and the flying-car technology of Terrafugia to improve services in the future.
Claiming it is ‘the safest ride-hailing service in China’, Caocao said all its drivers must have at least three years of driving experience and undergo criminal record and health checks. The drivers also need to finish training at so-called ‘Caocao Schools’ to learn about etiquette, communication skills and basic first-aid in cases of heart attack or cerebral hemorrhage.
The name Caocao comes from a Chinese idiom that roughly translates as “speak of the devil”. The idiom originated from Cao Cao, a Chinese warlord and one of the greatest generals of the Eastern Han Dynasty.
Hotly Contested car-sharing market: three models
Caocao is competing with many other players in the hotly contested car-rental and ride-hailing market in China.
In 2017, Didi Chuxing completed 7.43 billion rides for 450 million users in more than 400 cities across China. Cheng Wei, founder and CEO of Didi, has declared globalization is a top strategic priority for Didi through diversified international operations and partnerships.
Days after Didi Chuxing acquired a majority stake in Brazilian rideshare startup 99, the Chinese company advertised online for a range of job openings in Mexico as it prepares to break into the country, one of rival Uber’s regional strongholds, Reuters reported.
Later arrival Caocao is different by being backed by an automaker offering a mobility service focused on new-energy cars.
Similarly, new energy car producer BAIC BJEV, a subsidiary of Beijing Automotive Industry Corporation (BAIC) Group, also operates a car-rental network, Qingxiang, with 31,500 cars in use in 12 cities.
Qingxiang now cooperates with Sesame Credit (Zhima Score) to allow high-score users to rent a car without paying any deposit. However, Qingxiang cars are mainly parked in four areas in Beijing, meaning users have to go there every time to find and return a car.
Overall, Chinese car sharing market is composed of three models – car-hailing app firms, P2P car rental companies, and timeshare enterprises, all in the phase of rapid growth and fierce competition.
The biggest factor affecting the car-sharing business perhaps still comes from government regulations. Beijing and Shanghai has banned ride-hailing services from hiring out-of-town drivers, requiring that drivers must have local hukou and local license plates.
The next to watch will certainly be if Meituan-Dianping, once known as “the Groupon of China”, can start another round of ‘price war’ in the market. The Tencent-backed company has launched its timeshare car rental service Meituan Chuxing, with service licenses acquired first in Nanjing and Shanghai.
It has planned to offer the service in Beijing, saying it has reached over 200,000 preregistered users for the new service on Jan. 9. But then Beijing’s local transportation administration apparently called a halt and it now remains unknown when the service will start.
Meituan has promised hefty subsidies to drivers and users, just as Didi Chuxing also engaged in price wars with its competitors at the beginning. This marketing tactic now popularly known as ‘burning money’ is found in other sectors too.
Didi takes 20% of every fare from the driver and analysists believe there’s still room to lower the percentage and chances for new Internet start-ups.