China tech giants in taxi-app battle

Uber didn't officially come to China until February 2014, and by the time the ridesharing service arrived, China's car-hailing app market was engulfed by a proxy war of copycats financed by Chinese Internet giants Alibaba and Tencent.

To lure more users, Kuaidi Dache, backed by Alibaba Group Holiding Ltd, and Didi Dache, backed by Tencent Holdings Ltd, have been subsidizing drivers and passengers. The move is thought by analysts to promote their mobile-pay applications, given Kuaidi and Didi users can get fare reductions only through their respective backers' mobile-payment apps.

The two apps have spent more than 2.4 billion yuan ($388 million) in the effort, which began in January and ended in August this year, the Xinhua News Agency reported. By the second quarter of 2014, the two companies controlled more than 99 percent of the market, according to iResearch, a Beijing-based Internet consultancy.

Uber, which is based in San Francisco, has avoided the duopoly segment and has been focusing on premium services. Uber service is now available in 10 Chinese cities: Beijing, Shanghai, Hong Kong, Guangzhou, Shenzhen, Wuhan, Hangzhou, Chengdu, Tianjin and Taipei.

Unlike in the United States, Uber doesn't employ independent drivers but works with existing car-rental firms because self-employed drivers are not permitted in China.

China's Internet is dominated by three giants known as "BAT": Baidu, Alibaba and Tencent. Baidu is known for its search engine; Alibaba for e-commerce; and Tencent for its instant messaging.

Lu Huiquan in New York contributed to this story.