China's Tencent, Huawei Launch Car-Hailing Platforms to Boost Ecosystems
Lu Hanzhi
DATE:  Jul 27 2022
/ SOURCE:  Yicai
China's Tencent, Huawei Launch Car-Hailing Platforms to Boost Ecosystems China's Tencent, Huawei Launch Car-Hailing Platforms to Boost Ecosystems

(Yicai Global) July 27 -- China's ride-hailing market is expected to become increasingly efficient as tech giants Tencent Holdings and Huawei Technologies are entering the sector to compliment their other services.

The WeChat operator released Tencent Mobility Service and Huawei unveiled its Petal Mobility this month, Yicai Global learned. However, the two Shenzhen-based firms are not directly competing with Didi Chuxing or Meituan as their respective platforms solely search for trips on other car-sharing platforms.

Information symmetry can cut pricing. Competition is likely to accelerate as Huawei and Tencent enter the mobility service industry because they can provide users with one-stop solutions that involve better experiences, Pan Helin, co-director of a digital economy institute at Zhejiang University International Business School, said to Yicai Global.

In Beijing, Tencent Mobility Service provides trips via three platforms, including Caocao Chuxing, Shouqi Limousine & Chauffeur, and Sunshine Travel. The Shenzhen-based handset manufacturer is offering services in Beijing, Shenzhen, Nanjing, and Hangzhou at least till August.

The pair has indirect goals. "Huawei expects to sell more cars via the platform, and WeChat hopes to find a new way to profit from its great number of users,” an industry insider said to Yicai Global.

Years of competition has squeezed the growth of the car-hailing market but what remains attractive is selling vehicles to users on these platforms, the above-mentioned insider added. Huawei has formed partnerships with many Chinese automakers to produce intelligent vehicles equipped with Huawei-made software.

Moreover, companies are looking to widen their ecosystems. The main goal is not likely to be a large market share in the car-hailing service market but instead, the two firms are trying to optimize their business layouts by using their navigation tools in more scenarios, Chen Liteng, a digital analyst at the Electronic Commerce Research Center of 100EC.Com, told Yicai Global.

The moves offer a new approach for Tencent and Huawei to profit from their huge user bases, making their users more loyal to their businesses, Chen noted.

The platforms are matchmakers. They connect users with service providers, Chen explained. The operators need to just offer a gateway for users to car-hailing services, a business model that is light in assets and operating costs, he added.

However, the business model has its limitations. Platforms that integrate other car-hailing platforms' services are restricted by their lack of offline infrastructure, Pan said.

In the long run, such platforms will likely need to get business licenses for their operations, Chen said. Moreover, third-party service providers' rights and obligations should be further defined, he added.

Editors: Tang Shihua, Emmi Laine, Xiao Yi

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Keywords:   New Product,Convergent Platform,Car-Hailing Service,Huawei,Tencent