Every new user of the Yidao service on the Baidu map app will get a 50 yuan ($8) subsidy, Baidu told the Global Times Monday via e-mail, adding that the service is only available in Beijing and will be rolled out in Shanghai, Shenzhen and Guangzhou.
Compared with Alibaba Group Holdings and Tencent Holdings, Baidu has been lagging in car-hailing service, Yang Yang, an analyst with iResearch Consulting Group, told the Global Times Monday.
Taxi-hailing app Kuaidadi is backed by Alibaba Group and integrated with Alipay, Alibaba's payment arm. Tencent Holdings invested in another major taxi-hailing app Didi Taxi and added it into its popular mobile instant messaging app WeChat.
Unlike Kuaidadi and Didi Taxi which offer taxi-hailing service, Yidao allows users to be picked up by high-end cars such as Mercedes-Benz and BMW.
Yidao charges by the hour and the price varies for different cars, according to Yidao's website.
News portal huxiu.com reported Monday that Baidu will also invest $300 million in Yidao, but the company declined to comment on the news.
A PR staff member of Yidao, who asked to remain anonymous, confirmed the cooperation but told the Global Times Monday that she had no knowledge of the investment plan.
Alibaba, Tencent and Baidu are engaged in cutthroat competition to snap up market share in all fields from digital map to online wealth management products in the mobile service arena.
While Alibaba's and Tencent's investments in taxi-hailing apps have earned the two companies' payment arms more users, Baidu seems to be reacting much slower than its rivals.
"Baidu lags way behind Alibaba and Tencent in grabbing opportunities in the transportation and tourism industries, though it owns travel booking website qunar.com," Yang said. "Thanks to the cooperation with Yidao, Baidu can compete with Alibaba and Tencent in the auto service field."
Baidu Map was opened 9.95 times on average per smartphone user in the first quarter, making it the most widely used mobile map app in China, Analysys International said in a report published on June 12. Google Map ranked second at 7.29 times per user.
Yidao car-hailing service was available in 57 Chinese cities in March and it expanded to 74 cities in June, according to the company's website.
Yidao positioned itself as a business car rental service that is similar to US car service provider Uber and provides discounts and subsidies, Yang said, noting Yidao is still at an early stage of attracting users.
Chauffeured car service providers such as Yidao and Uber cooperate with local car rental companies, which have vehicles that are approved and recorded by the traffic regulator for rental, Zhao Zhanling, a legal counsel with the Internet Society of China, told the Global Times Monday.
However, Yidao and other similar service providers must face legal risks, because many of them use private cars without car rental licenses in their business, according to Yang.
With its expansion to lower-tier cities, Yidao will have to use more private cars and the legal concern will become more severe, Yang said.
In Beijing, the several thousand officially approved rental cars are not enough to meet market demand so some car-hailing service providers hire unapproved private cars, which is illegal, Zhao said.
Other than the legal issue over private cars, drivers in chauffeured car services pose another potential legal risk.
China's current vehicle rental regulation permits car rental and forbids providing a driver with the car.
The future of the chauffeured car service industry highly depends on how the government amends the related regulation, Zhao noted.
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