Meituan-Dianping puts car-hailing on menu

Chinese group-buying and dining information platform Meituan-Dianping has finally launched ride-hailing services in Shanghai, heating up competition with Didi Chuxing in the nation's burgeoning but cutthroat car-hailing market.

Drivers on the new platform will be charged 8 percent commission fees, which is lower than the 20 percent charged by Didi. What this means is that drivers can on average make at least 600 yuan ($95) a day if they are online for 10 hours and complete 10 orders a day. In addition, drivers will also get another 200 yuan after they surpass the 600-yuan mark.

The real benefit, however, is for drivers who join the platform early can avoid commission charges and keep their entire earnings for the first three months. Meituan-Dianping will only charge them 0.5 yuan for each order.

Such tantalizing subsidies put Meituan-Dianping in direct rivalry with Didi, the country's largest car-hailing platform, and are set to intensify the price war in the Chinese ride-hailing market, with incentives being the trump card for firms to grow both driver and user numbers.

"Meituan-Dianping launched car-hailing services in a bid to help customers improve transportation efficiency and integrate both traditional and emerging businesses. We aim to help people eat better and live better," said Wang Huiwen, senior vice-president of Meituan-Dianping.

Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy, said: "Such tantalizing subsidies are set to bolster its transportation capacity as major ride-hailing companies witnessed a drop in the number of drivers amid a string of government requirements to define which types of cars can be used for car-hailing business."

Meituan-Dianping is one of the country's largest e-commerce platforms and has been featuring a wide variety of services from food to films and hotel reservations. It is reported to have 290 million active users annually and more than 4 million merchants by last November.

"The platform has natural advantages in terms of its huge user base. Also, most of its services are directly related to intercity transportation services, which will enable an easy transition from one service to another within the app," Lu said.

The company's latest move means that customers can directly call a taxi or express car when they search for a certain restaurant, and don't need to return to the home page.

"To win market share, user experience is still an important factor. Currently in China, supply is still short of demand. Those who provide more resources at less cost will become competitive and the ones that offer better services will be more used by customers," said Wang Xiaofeng, a senior analyst with research firm Forrester.