Domestic food delivery company Meituan-Dianping launched on-demand car service in Shanghai on Wednesday.
It is Meituan's first move to deploy ride-hailing services across the country after it unveiled pilot car-hailing services in Nanjing, capital of East China's Jiangsu Province, in February 2017.
Users in Shanghai can find the channel for Meituan Dache, including taxi and express car services, on the Meituan app.
Meituan Dache was certified to offer online car-hailing services by the relevant authorities in Shanghai in June 2017.
Wang Huiwen, senior vice president of Meituan-Dianping, said that the mission of Meituan-Dianping is "to make everyone eat better and live better," according to a press release the company sent to the Global Times on Wednesday.
Meituan Dache is actively promoting the combination of traditional and emerging businesses by efforts like advancing the taxi sector to tie up with the internet, Wang said, adding that the car-hailing service aims to help users improve the efficiency of travel.
"I'm quite looking forward to Meituan Dache as the newcomer will provide more options for consumers, which will help balance the online car-hailing market that is dominated by Didi Chuxing," a 20-something white-collar worker surnamed Wang in Beijing told the Global Times on Wednesday.
Didi Chuxing accounted for more than 90 percent of the market, according to media reports.
Many drivers in Shanghai shifted from Didi to Meituan on Wednesday as Meituan offers more subsidies and awards for drivers, jiemian.com quoted an unidentified driver in Shanghai as saying.
Meituan gives incentives of 10 yuan (.58) to drivers for their first ride during the morning rush hour and 8 yuan for the second ride, according to the driver. But these drivers did not sign contracts with Meituan, opting instead to try the platform for a while before making a final decision, the Shanghai driver noted.
Didi takes 20 percent to 30 percent of earnings from its drivers who offer express service, a Didi driver surnamed Liu told the Global Times. In contrast, Meituan said it will not take fees from drivers serving Meituan Dache in Shanghai during the first three months, according to the press release. Meituan takes 8 percent from drivers' earnings in Nanjing.
Given Meituan's incentives, "a price war may break out between Meituan and Didi, but it won't last," forecast Qi Xu, former vice president of ctcnn.com, which provides tourism analysis.
Meituan Dache's bonuses to both drivers and users would seem to impose little pressure on Didi in the short term because it is hard at the moment to forecast the growth of Meituan's on-demand car service, Qi told the Global Times on Wednesday.
Meituan launched the new service mainly to enrich its business, and incentives for drivers and users will bring the platform increased network flows, Zhao Xiang, an industry analyst at Beijing-based research firm Analysys, told the Global Times on Wednesday.
Amid increasing competition in the market, Didi also plans to further expand into lifestyle services. The firm will reportedly launch a food delivery business in Wuxi, Jiangsu Province, on April 1.
Didi may face more challenges than Meituan amid the expansion into new segments because Meituan already has a large user base in the lifestyle services sector, but Didi's existing users are not related to the food industry, according to Qi.
Experts said that there will be more and more cross-sector business tie-ups in the lifestyle services sector and other internet industries.
An increasing number of internet companies will seek more cross-sector business in hopes of activating their users and expanding the chances for those users to spend money, Zhao said.
"This will become the norm in the internet sector in the coming years," she said.
Experts noted there will be impact to the industry.
"Cross-sector cooperation will lead to mergers and acquisitions… If these businesses want to maintain sustainable growth, they need to promote attractive products that really meet consumers' needs," said Qi.
As relevant statistics and information of Meituan Dache had not been input into the online car-hailing industry supervision platform in Shanghai, the local transport authority ordered the platform to provide the information, news site eastday.com reported Wednesday.