Major Authors

Yidao Yongche: Is China’s Uber Better than Uber?

January 07, 2015


In just about three years, Yidao Yongche has carved a niche for itself in China’s car rental market. And now it is going global.

When American ride-hailing company Uber formally entered China in February 2014, its main Chinese counterpart had already become a formidable rival. Since its full launch in early 2011, Yidao Yongche has entered 76 cities across the country, operating more than 100,000 cars in total; its users are “in tens of millions”, according to the company’s co-founder and Vice President Zhu Yueyi.

Unlike Uber, Yidao Yongche started as a car rental website at the very beginning; and as the location-based technology went mainstream, it quickly caught up by shifting to mobile. Today the vast majority of its customers come from its smartphone app and half the ride requests are real-time (the rest are reservations). The company claimed to own the biggest market share in China’s business car rental space.

On the financial side, Yidao Yongche has raised about $200 million in the past few years, according to various media accounts. Its investors include venture capital fund CDC Capital, travel booking site Ctrip and Singapore government fund GIC.

But now the company’s stellar growth has met competition from two ultra-competitive taxi-hailing apps—Didi Dache and Kuaidi Dache. Backed respectively by Tencent and Alibaba, the two quickly split up more than 90% of the taxi market; and a couple of months ago, Didi and Kuaidi formally launched their own chauffer service, which provides users more luxurious car models and riding experience.

The new service is seen as a direct challenge to Yidao Yongche because Didi and Kuaidi have gained more than 100 million users through their aggressive expansions in the regular taxi market. Last week, Baidu announced a strategic investment into Uber (some estimate it to be $600 million), though it’s still unclear how their collaboration will play out.

But compared with Uber, whose operation in China is still small, Yidao Yongche has a longer reach to customers; and since it doesn’t need to divide its attention with the dogfight in the taxi market, Yidao Yongche has more resources to focus on differentiation—something the company believes will win over affluent middle class customers.

In this interview, Zhu Yueyi talks about Yidao Yongche’s interesting experiments to build brand loyalty and what the company’s next step is in the face of an increasingly competitive market.

Q. Yongche started as a website. How did the transition go from PC to mobile? Have your target customers changed over the years?

Zhu Yueyi, Co-founder and Vice President of Yidao Yongche

A. When we launched in 2011, the mobile payment environment in China wasn’t as good as today. We mainly relied on telephones and the website to provide services. In the second half of 2012, we started to see that our users were shifting to mobile. Today I’ll say that 80% to 90% of our daily orders are from mobile.

And our core customers have always been those who are better off financially and willing to try out something new and fun.

Q. How do you build a brand that appeals to those customers?

A. We rarely do advertisements. Instead we want our products to represent the core value of our brand, which is innovation and quality of life.

For example we launched a project called Y-Car Lab, where we explore new and interesting transportation-related ideas. One of them is the ‘manicure car’—girls can summon a mobile nail salon nearby to wherever they are and have their nails done inside (the project is a partnership between Yidao Yongche and Helijia, a manicure service provider).

Another is a service called Yidao Yongji (yong ji means “using an airplane”). The idea is that private jets are usually empty on their return flights, and our customers can take advantage of that by ‘crowd-booking’ a private jet with much lower costs. But that was just an experiment we tried in April with private jet operator Deerjets in Hainan, which we aren’t doing anymore today.

We also work with carmakers like Volvo to let our users experience their brand new models. The feedback so far from users is very positive.

Q. How does Yidao Yongche differentiate itself from competitors?

A. Our focus is not offering huge subsidies or discounts (Taxi apps like Didi Dache and Kuaidi Dache offer such discounts to passengers and taxi drivers frequently). We hope to build a reputation that Yidao Yongche makes users’ life better and easier. So in our marketing efforts and our communication with users, we try our best to make them feel safe and [have] fun. The examples I gave just now are what make the Yidao Yongche brand special and refreshing.

Q. Your competitors are all backed by internet giants, namely Tencent, Alibaba and Baidu. Do you have similar plans? Baidu and Uber announced a strategic partnership recently, how does that affect your collaboration with Baidu?

A. In terms of finance, the only thing I can say is that we are not short of cash. And in terms of Baidu—it is a very important partner of ours. So far we’re the only chauffer service provider for Baidu Maps. We have had a pleasant and fast-growing partnership with Baidu.

And I probably don’t know more than you do about their relationship with Uber.

Q. Do you have concerns about regulations? Do you expect the current model, in which you partner with licensed car rentals and staffing companies to provide service, to continue?

A. It’s normal to see regulation fluctuations in the short term. We have frequent communications with regulation makers on this matter. And I think we should give them time to work [on changing regulations].

I think the consensus is that what we’re doing is improving efficiency. It’s just that the regulators are still trying to figure out how to make appropriate rules. And we want to work with them to better standardize and protect the industry. One possibility is that in the future, local governments can build official car rental platforms, on which Yidao Yongche, maybe together with other players, can operate.

Q. Yidao Yongche also offers services outside of China. What’s the business model overseas?

A. We focus on providing local transportation services to overseas Chinese tourists. We have launched in cities like Los Angeles and New York—the most popular destinations among outbound tourists. Before the Lunar New Year (February 18, 2015) we expect to enter 15 cities globally.

We also work with car rental companies abroad. But specific models vary from city to city. From the users’ perspective, it works the same no matter where you are. And our drivers in overseas markets are all Chinese speakers.

Q. How do you use all the data? Any interesting attempts?

A. We are very cautious about using the data generated by our users. And we focus on using it to satisfy users’ needs, not ours. For example, one thing we do differently from other companies like Uber is that we don’t auto-select drivers for users on the basis of data. When several drivers respond to a user’s request, the user can choose which car he or she wants to ride in (because auto-matching users and drivers benefit the company, but not riders).

And in terms of serving users’ needs, we plan to now make destination recommendations based on data-driven user profiles. For example, we may recommend a shopping mall to a user and if the user buys certain merchandise there, he or she can enjoy a free Yidao Yongche ride. We’ll try to make sure that users will find our recommendations interesting and also useful.

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