Didi Dache to cooperate with Mengniu

Dairy will sponsor app's 'red envelope' campaign for Spring Festival

Didi Dache, a leading Chinese taxi-hailing app developer and service provider, announced on Monday that it has reached a strategic cooperation with the county's dairy giant Mengniu Dairy Group on business opportunities during the upcoming Spring Festival holidays.

Via the cooperation, Mengniu will sponsor the "red envelope" campaign by Didi Dache during the festive holidays, according to a press release that the dairy company e-mailed to the Global Times Monday.

The "red envelope" is a kind of coupon to subsidize passengers when they call for taxis and pay the drivers via the Didi Dache app.

Customers of Didi Zhuanche, an auto rental service offered by Didi Dache, could also receive Mengniu milk as gifts when they book and pick up their rental cars.

In addition to the promotional activities, Mengniu and Didi Dache will also share their resources.

For instance, customers and staff members of Mengniu are encouraged to participate in the "red envelope" campaign by Didi Dache, according to the press release.

Didi Dache could not be reached for comment by press time.

Through the cooperation, "Mengniu could promote its brand via the online platform of Didi Dache, and Didi Dache would gain advertisement fees and other types of sponsorships from Mengniu," Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times on Monday.

Xu Hao, an analyst at Internet consultancy Analysys International, also told the Global Times Monday that the major purpose of Mengniu in this cooperation should be to "post its advertisements via the Didi Dache services platform."

But Zhang thought the cooperation will not likely lead to an obvious jump in users for Didi Dache as the public has gradually lost interest in the "red envelopes," which were very popular during the Spring Festival holidays earlier this year.

Once the taxi-hailing apps stopped subsidizing passengers, their user numbers have dropped. And "they still have not figured out a successful way of making profits amid intense competition," Zhang noted.

The daily number of orders made using taxi-hailing app Didi Dache dropped by 40 percent after the company running the app stopped subsidizing passengers on May 17, the Beijing News reported on May 21, quoting Cheng Wei, CEO of Beijing Xiaoju Technology Co, which operates Didi Dache.

Cheng also said only 3 million orders were made on average daily on the smartphone app after the company had announced it would stop subsidizing taxi riders one week earlier, compared with 5.3 million daily at its peak when it offered subsidies.

Before May 17, taxi riders who used Didi Dache to hail a taxi could get 3 yuan ($0.49) back per ride from Didi Dache, which is embedded in Tencent Holdings' WeChat app.

Passengers were even able to get back as much as 12 yuan from Didi Dache at the beginning of this year.

In February, Tencent's main rival, Alibaba Group, countered Tencent's cooperation with Didi by joining with taxi-hailing app Kuaidadi, offering consumers and drivers 10 yuan back if they used Alibaba's mobile payment service Alipay Wallet to pay for their taxi fees.

Kuaidadi stopped this offer on the same day Didi Dache stopped theirs in May.

The total number of taxi-hailing app users hit 154 million at the end of the third quarter this year, with Didi Dache and Kuaidadi accounting for 44.9 percent and 54.4 percent of market shares, respectively, nationwide, according to data by Analysys International.

Despite the intense competition and unclear profit model for the sector, Zhang said both Didi Dache and Kuaidadi will continue their promotional activities as their respective financial supporters, Tencent and Alibaba Group, planned to grab larger market shares in more areas.

Tencent and Alibaba are two of the main players in online retailing and payments and compete fiercely with each other in sectors such as instant messaging and the Internet finance sector.

"The two Internet giants also plan to capture a greater share of the taxi-hailing and auto rental businesses," noted Zhang.