Meituan Edges Closer to Ride Hailing Expansion After Picking Up Beijing License
Liao Shumin
/SOURCE : yicai
Meituan Edges Closer to Ride Hailing Expansion After Picking Up Beijing License

(Yicai Global) Dec. 28 -- Meituan Dianping, one of very few companies poised to threaten ride-hailing giant Didi Chuxing in its home market, has secured a license to operate the service in Beijing.

The capital's transport ministry has approved Meituan's Dache service to offer ride hailing in the city, state-backed Beijing News reported. It also granted the license to Mercedes-Benz's ATBB app and Beijing-based voice recognition firm Sogou, meaning there are now 11 qualified providers in the eastern metropolis.

Meituan initially intended to move into Beijing at the end of 2017 after a 10-month trial in Nanjing, the provincial capital of Jiangsu province, but suspended the plans after struggling to get a license. The Meituan app still says that the service is not available in Beijing if you log in from the city.

"Through our pilot programs, we are evaluating the synergistic value car-hailing services could bring to our platform," the firm said in the prospectus for its Sept. 20 listing in Hong Kong. "Based on current market dynamics, we do not expect to further expand this service."

But industry analyst Tang Xin believes "it's just a matter of time," before the Beijing-headquartered firm starts running the service in its home town. "Beijing is a hotly contest market for ride-hailing companies, so Meituan will definitely head there," he said.

China's ride-hailing market is dominated primarily by one firm: Didi Chuxing, the transport behemoth that drove Uber out of China in a price war that cost each firm billions to become the world's largest player in the field. However, Didi has come under major scrutiny for frequently rule-breaking and the murders of two female passengers this year, both carried out by their drivers.

"The overall economic environment and capital market are not ideal at present," Tang said, commenting on whether or not Meituan's entry to Beijing would start a price war. "Fighting a price war would be difficult to maintain, I don't think there is likely to be one in the short term," he added, saying Meituan needs to take profitmaking seriously now that it has gone public.

The firm logged an adjusted net loss of CNY2.5 billion (USD365 million) in the third quarter, narrowing its deficit from the second, according to its financial report on Nov. 22. It obtained licenses to offer ride hailing in Hangzhou, Chengdu and Wenzhou in spring, but has not rolled out services in any of the cities yet.

Editor: James Boynton

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Keywords: Meituan , Ride Hailing , Didi