2013 China Taxi-hailing App Report (Brief Edition)

8/10/2019 2013 China Taxi-hailing App Report (Brief Edition)

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IRESEARCH

CONSULTINGGROUP

2013 China Taxi-hailing App Report

Brief Edition


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380

460510

560610

670730

790850

230

300360

420

500

580640

690

750

19.0%12.3% 9.9% 7.7% 10.2% 9.3% 8.0%

7.6%

30.0%

17.5% 18.0% 19.5% 15.1%

10.2% 8.2% 8.1%

0

200

400

600

800

1,000

1,200

2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e

China Netizen and Mobile Internet User Base 2009-2017

China Netizens (million) China mobile Internet users (million)

% Growth rate of China Netizens % Growth rate of China mobile Internet users

2

Overview of China Taxi-hailing App Market

User Base: Mobile Internet Users to Reach 500 Million in 2013

China netizens are predicted to hit 610 million in 2013 and mobile Internet users to reach 500 million. Thepenetration of mobile Internet is expected to rise to 82%. The growth of mobile Internet users outpaced that

of overall netizens but the gap is narrowing.The rapidly growing mobile Internet user base creates ongoing demand for mobile Internet sector. In the lightof the enormous demand of mobile Internet users, numerous mobile app developers provide professionalmobile services based on the unique characteristics of mobile Internet.

Note: Mobile Internet users refer to users who accessed and used the Internet via devices including but not limited to mobile phones and tablets in thepast half a year.Source: 2009 to 2012 data comes from CNNIC and 2013 to 2017 data is from iResearchsprojections.


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80

200

360

480

560

630

700

150.0%

80.0%33.3% 16.7% 12.5% 11.1%

0

200

400

600

800

1,000

2010 2011 2012 2013e 2014e 2015e 2016e

Number of Smartphones in Use in China 2010-2016

Smartphones (million) % Growth rate

3


Hardware Support: Number of Smartphones in Use in China to Total 480 million in 2013

The number of smartphones in use in China is predicted to reach 480 million in 2013. Along with rising

smartphone penetration, smartphones have become the major device for users to access mobile Internet aswell as the foundation and an important driver for the rapid development of mobile Internet. Smartphones willfully replace feature phones in the future, resulting in a further growing market.

Note: The number of smartphones in use refers to the number of smartphones which are in use by the end of each year.

Source: Based on publicly available information, industry interviews and iResearch statistical model. It is for reference only, notfinancial advice.


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The difficulty in hailing a taxi is not uncommon in Tier 1 & 2 cities in China. On the one hand, passengers areunable to get a taxi. On the other hand, taxi drivers opt for lucrative rides, resulting in high empty-run rate, which

is mainly caused by supply-demand imbalance of the taxi market. In addition, information asymmetry betweenpassengers and drivers also intensifies the problem.

Fundamental reason: supply-demand imbalance of the taxi market

Take Beijing for example, policies including traffic control based on odd/even license plate numbers, thoroughinvestigation of drunk driving, increase in parking fee, etc. drove many locals to take public transportation, leadingto climbing demand for taxi. Nevertheless, Beijing municipal government carries out the policy to control thenumber of taxis at 660,000. Therefore, rising demand and unchanged supply is the primary reason for thedifficulty in hailing a taxi.

Additional contributor: information asymmetry between passengers and drivers

From the perspective of taxi drivers, they favor medium and long rides and prefer to pick up passengers whosedestinations are on their way during shift change or when they are off duty. As a result, they may refuse to takepassengers in some cases, giving rise to empty run and low efficiency.

The market is in need of a unified taxi dispatch platform to solve information asymmetry between passengers anddrivers. The mechanism can make it easier for passengers to get a taxi and improve the utilization of taxis, thussomewhat solving the problem in hailing a taxi.

Background: Taxi-hailing Difficulty Prevailed in Tier 1 & 2 Cities

mainly pick up street hails

with low efficiency

prefer medium & long ridesand passengers whose

destinations are on their way

empty run arising from

selection of passengers with

low efficiency

Passengers

Taxi Drivers

Difficulty in hailing a taxi:

during rush hours and on

holidays

in remote locations

in bad weather and late

at night


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Business Model of Taxi-hailing Apps

PolicyInternet

InfrastructureCredit System

TransactionSecurity System

Passenge

rs

TaxiDrive

rs

Taxi-hailingApps

KeyOperations

Processes

Request Handling

SupportingSystem

Sending outtaxi requests

Sendingorders

Drivers contactingpassengers

ReceivingOrders

HandlingOrders

DispatchingOrders toDrivers

DriversCompetingfor Orders

Order DispatchingSupply-demand

Matching


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Introduction to Major Taxi-hailing Apps

Early 2012 saw the launch of the first taxi-hailing app in China. In more than a yearstime, about a hundred taxiapps were introduced to the market. Didi Taxi and Kuaidi Taxi are top players in the market, each with over 5

million registered users. Beijing-based Yaoyao Taxi earned a head start in the market. Despite the late launch,Taxi Assistant and Dahuangfeng Taxi enjoy certain advantages in special services and region coverage. Theabove three are second-tier players in the market.

Didi TaxiLaunched in Sept. 2012DeveloperBeijing XiaojuTechnologyDescriptionThe largest taxi app inChina

Taxi AssistantLaunched in May, 2013Developer: YongcheDescription: Yongchestaxi-hailing app

Kuaidi TaxiLaunched in Sept. 2012Developer: Hangzhou Kuaizhi Technology

Co., Ltd.Description: Focusing on Hangzhou marketwith widest city coverage

Dahuangfeng TaxiLaunched in Apr. 2013Developer: Shanghai Dahuangfeng NetworkInformation Technology Co., Ltd.Description: A Shanghai-based taxi-hailing

app

Yaoyao TaxiLaunched in Mar. 2012DeveloperBeijing JuhezhongxinInformation Technology Co., Ltd.DescriptionThe first taxi-hailingapp in China

Note: Data is as of August 2013. Launch time refers to the time when it is launched on iOS platform.

iTaxiLaunched in Sept., 2012Developer: Shanghai FleetyCommunications, Ltd.

Introduction to Major Taxi-hailing Apps in 2013


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Major Taxi App Companies Obtained Total Investment of over $ 40 Million

As of June 2013, five major taxi-hailing app companies obtained total investment of over $ 40 million due to thegood prospects for the sector. Future investment or acquisition hinges on the performance of taxi app companies.

Apart from venture capitals, Internet companies also competed for share in the market as Tencent invested inDidi Taxi and Alibaba invested in Kuaidi Taxi. Internet tycoons invested in the sector mainly because they valuethe role taxi apps plays in acquiring traffic and aspire to gain a foothold in LBS market. Nevertheless, taxi appmarket is still in the early stage of development and it takes time to find out whether taxi apps will become a majorsource of traffic in the future.

Recipient Time Investor Investment Amount$ Million

Didi Taxi

Sept. 2012 GSJ Ventures 3.0

Apr. 2013 Tencent 15.0

Kuaidi Taxi Apr. 2013 Alibaba 4.0

Yaoyao Taxi May 2012 Sequoia Capital 3.5

Taxi Assistant(YongChe)

Apr. 2013 China Broadband Capital Partners 15.0

Dahuangfeng Taxi Jun. 2013 Morningside Ventures 3.0

Investment in China Major Taxi App Companies 2012-2013

Note: China Broadband Capital Partners invested in Yongche, the parent company of Taxi Assistant.

Source: Based on publicly available industry information and in-depth interview with enterprises. Data is as of June 2013.


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Daily Orders of Taxi Apps Reached 340,000, Didi Taxi Accounted for over 50%

As of August 2013, daily orders of taxi apps in China reached 340,000 which mainly came from users in Beijing,Shanghai, Hangzhou, Guangzhou, and more.

Didi Taxi ranked first by average daily orders with a share of 59.4%.

Note: The data is as of August 2013. The number of orders only counts successfully transacted orders.Source: Based on in-depth industry interview and iResearch evaluation model.

Didi Taxi, 59.4%

Kuaidi Taxi, 29.4%

Yaoyao Taxi, 2.9%

Taxi Assistant, 2.4%

Others, 5.9%

Market Share of China Taxi Apps by Daily Orders in 2013


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Didi Taxi Ranked First by Monthly Startups and Time Spent

Note: Measurement covers four taxi-hailing apps. Startups refer to the number of effective startups of the app by users.

Source: mUserTracker, based on the long-term measurement of usage behaviors of 100 thousand iOS and Android smart device users.

Didi Taxi,49.8%

Kuaidi Taxi,

34.2%

DahuangfengTaxi, 15.4%

Zhaochejilai,0.6%

Market Share of Major Taxi Apps by MonthlyTime Spent in 2013

0.10

2.10

3.24

5.92

0 2 4 6

Zhaochejilai

DahuangfengTaxi

Kuaidi Taxi

Didi Taxi

Monthly Startups of Major Taxi Apps in July 2013

Monthly startups (million)


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Taxi-hailing Apps Covered 28 Cities in China, Main Battlefield Included Beijing, Shanghai,Guangzhou, Shenzhen and Hangzhou

As of August 2013, taxi-hailing apps have covered 28 major cities in China.

Of 66,000 taxis in Beijing, 48,000 taxis used taxi apps, which enabled Beijing to rank first by the number of taxiscovered. 10,000 out of 12,000 taxis used taxi-hailing apps in Hangzhou which ranked first by penetration rate.

Note: Data on cities covered and penetration is as of Aug. 2013.

Cities Covered by Taxi Apps and Penetration in China in Aug. 2013

XiamenShenzhen

GuangzhouKunming

Fuzhou

Changsha

HangzhouHefei

ShanghaiNanjing

WuhanChengdu

Chongqing

Xian

Zhengzhou

ShijiazhuangJinan

QingdaoTianjin

Dalian

Beijing

Shenyang

Lanzhou

Changchun

Harbin

Ningbo

Suzhou

Chengde

Covered 48,000taxis with apenetration rate

of 73%

Beijing

73%

Shanghai

Covered32,000taxiswith apenetrationrate of 64%


Hangzhou

Guangzhou Shenzhen


Covered7,000 taxiswith apenetrationrate of 40%

64% 83%

56% 40%


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The Detailed Rules bansadvertising in taxi apps.

Taxi drivers earnpassengers and

income

Service charge forapp promotions

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Operators Groping for a Profit Model of Taxi-hailing Apps

At present, China taxi-hailing market is still in the phase of market cultivation. As a bridge between passengersand taxi drivers, taxi-hailing apps provide free services to both parties without a clear profit model. Some appoperators that used to charge passengers and taxi drivers for the service have to stop the practice due to policy

and competition.Uber, a taxi-hailing app in the U.S., sends passenger requests to private cars, Ubers rented cars or availablecars of car rental companies. It will charge a 20% commission per transaction via credit card. However, Ubersmodel is unlikely to work in China due to policy constraint.

Share earnings with partnerdrivers or taxi companies

Immediate Booking

Advance Booking

Booking with Tips

Beijing bans tippingoption of taxi apps.

Note: Detailed Rules refer to Detailed Rules for the Administration and Implementation of Taxi-hailing App Services in Beijing issued by BeijingMunicipal Commission of Transport in July 2013.

Profit Model of Taxi-hailing Apps in 2013


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BAT Entered Taxi-hailing App Market

Alibaba Invested in Kuaidi Taxi

Tencent Invested in DiDi Taxi

Event: Didi Taxi obtained investment of $ 15 million from Tencent in April 2013.Comments from iResearch: Didi Taxi will closely cooperate with WeChat, a product ofTencent positioned to serve as the foundation for local service and LBS apps. Possiblecooperation include WeChat Positioning, WeChat Map and etc. The investment is meantto pave the way for the monetization of O2O business of WeChat.

Event: Kuaidi Taxi acquired investment of $ 4 million from Alibaba in April 2013.Comments from iResearch:Alibaba invested in Kuaidi Taxi, a Hangzhou-based taxi-hailing app, which has been integrated into Alipay Platform. The gesture echoesAlibabasambition to further its mobile strategy to form an ecosystem consisting ofmobile e-commerce, mobile social networking service and local lifestyle service.

Baidu Integrated Taxi-hailing Function into Its Map

Event:In April 2013, Baidu Map introduced a new taxi-hailing function powered by DiDiTaxi to enhance its location-based services.Comments from iResearch:As the trump card of BaidusLBS strategy, Baidu Mapcovers services including food & drink, entertainment, transport, lifestyle and more. Themove indicates that Baidu intends to cover more LBS products to enrich its serviceswhile providing a powerful launching pad for its O2O platform.


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Case Studies of China Taxi-hailing App Operators

Founders: Cheng Wei (CEO), Wu Rui, Li Xiang, Zhao Yibo and Zhang Bo

Financing: receiving $ 3 million investment from GRS Ventures in Sept. 2012 and $ 15 million investment from

Tencent in April 2013.City coverage: 17 (Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Tianjin, Wuhan, Chengdu, Chongqing,Hangzhou, Xian, Zhengzhou, Changsha, Hefei, Xiamen, Dalian and Qingdao)

Partnership:

Cooperated with top mobile app operators (Baidu Map & Amap)

To closely cooperate with WeChat after receiving the investment from Tencent

Note: Data is as of Aug. 2013.Source: Based on publicly available data and in-depth interviews with enterprises.

Overview of Didi Taxi

Didi Taxi was integrated into BaiduMap and Amap btw Apr. and Jun.2013 and partnered with Qunar forairport drop-off service.

Xiaoju Technologywas founded inBeijing in Jun.2012

Jun. 2012 Sept. 2012 Apr. 2013 May 2013 Aug. 2013

Its taxi-hailing appDidi Taxi waslaunched to thepublic in Sept.2012

Didi Taxi received $ 3million investment fromGRS Ventures in Sept.2012

Didi Taxi covered17 cities in Chinaas of Aug. 2013.

Milestones of Didi Taxi

In Apr. 2013, Didi Taxiobtained $ 15 millioninvestment fromTencent.

Jun. 2013


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Orders of Didi Taxi Quintupled in Five Months, 60% of Its Orders Came from Firs-tier Cities

Note: Orders only include successfully transacted orders, excluding unfinished orders.

Source: Based on in-depth interview with enterprises and iResearch data evaluation model.

Along with growing popularity of taxi-hailing apps, their user base increased substantially.

Measurement data from iResearch shows that daily orders of Didi Taxi quintupled to 150,000 from 30,000 in the past

five months at a monthly growth rate of over 25%.As for regional distribution of orders, orders from first-tier cities (Beijing, Shanghai, Guangzhou and Shenzhen)accounted for 63.3%, indicating a clear advantage of Didi Taxi in top-tier cities in China.

Beijing, 32.4%

Shanghai,16.2%

Guangzhou,8.5%

Shenzhen,6.2%

Others, 36.7%

Regional Distribution of Didi Taxi Ordersin August 2013

30

50

80

100

15066.7%

60.0%

25.0%

50.0%

0

50

100

150

200

Apr. May June July Aug.

Daily Orders and Growth Rate of Didi TaxiApr.-Aug. 2013

Daily orders (000) % Growth rate


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Didi Taxi Covered 16% of Taxis in China, Penetration among Drivers in Tier 1 Cities Topped 30%

Note: Driver penetration refers to the ratio of taxi drivers who installed the app to all taxi drivers in the city. The number of taxi drivers is 1.6 times the number of

taxis in use in the city, that is, for every 10 taxis, there are 16 drivers. The number of taxis in use is based on publicly available market data in 2012.

Didi Taxi covered 16% of taxis in ChinaAs of Aug. 2013, 180,000 taxi drivers have installedDidi Taxi app. At present, there are 1.1 million licensed

taxis nation-wide and Didi Taxi covered 16% of taxis.

Didi Taxis penetration among taxi driversin first-tier cities exceeded 30%

As of Aug. 2013, a total of 40,774 taxi drivers in Beijinginstalled Didi Taxi app with a penetration rate of43.2%. The figures in Shanghai and Guangzhoureached 27,000 at 32.4% and 11,780 at 39.3%respectively.

23,000

24,000

25,800

30,000

83,300

94,300

7,100

16,420

11,700

11,780

27,000

40,774

0 20,000 40,000 60,000 80,000 100,000

Shenzhen

Hangzhou

Wuhan

Guangzhou

Shanghai

Beijing

Penetration Rate of Didi Taxi Users Over TaxiDrivers in Major Cities in August 2013

Didi Taxi user Taxi driver

43.2%

39.3%

32.4%

45.3%

68.4%

30.9%

PenetrationRate


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Time Event Details

April 2013Integrated into

Baidu Map

Taxi-hailing function was integrated into Baidu Map. Users only need to type intheir mobile phone numbers, current locations and destinations to complete anorder. It also supports tipping option.

May 2013Partnered with

Qunar for airportdrop-off service

Qunar app offers flight assistant service to its users. After booking air tickets viaQunar, users will be asked whether they need airport drop-off service. If theanswer is positive, Qunar app will send users places of departure anddestinations to the driver users of Didi Taxi.

June 2013Integrated into

Amap

Users do not need to install Didi Taxi app as taxi-hailing function is built in Amapand orders will be sent to driver users of Didi Taxi once users enter theirdestinations and mobile phone numbers.

Major map service operators

The largest travel search engine

Didi Taxi Joined Hands with Mobile App Operators

Summary of Didi Taxis Cooperation in 2013

Taxi-hailing function was

integrated into Baidu Map


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Appendix I Definitions

Concept

Definition

Taxi App

Taxi app, also called taxi-hailing app, refers to an app installed in a smartphonewhich sends out taxi requests. It often has two versions, the driver version andpassenger version, which are installed in driversand passengersmobile phonesrespectively.

Taxi App User Taxi app users refer to passengers who used taxi apps and excludes driver users.

Taxi App Registered UserBase

Taxi app registered user base refers to the number of registered users of thepassenger version of taxi app, i.e. the number of users who downloaded andactivated the app.

Driver Penetration RateDriver penetration rate refers to the ratio of drivers who installed taxi apps to alldrivers in the city.


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Appendix II

Methodology

This report mainly adopts research methods including interviews with related enterprises, desktopresearch and user survey.

Gain an in-depth and detailed understanding of the operations of enterprises as well as accurateoperations data and trend forecasts of the industry by face-to-face interview or telephone interview withmajor taxi app operators.

Desktop research to obtain industry data by analyzing publicly available information of mobileInternet and taxi-booking sector.

Data collection and analysis of user survey mainly adopt online survey method via iUserSurvey inconjunction with in-depth interview with and research on taxi drivers. iUserSurvey is a market research

platform of iResearch specifically designed for user survey of online media.

User survey: Online survey is conducted via iClick community in September 2013 and a total of 1,893

questionnaires were collected. After removing invalid questionnaires, we finally obtained 659 valid samples.

Driver Survey:Sampling survey of taxi drivers was carried out in Beijing, Shanghai, Guangzhou and

Shenzhen in September 2013. N=120.


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2013 China Taxi-hailing App Report (Brief Edition)