Chinese online travel service provider Ctrip.com International, Ltd. (NASDAQ: CTRP) has obtained a ride hailing license from Tianjin Municipal Transportation Commission to operate ride hailing business nationwide, the company said in an official statement.
Ctrip is the latest new entrant to an increasingly crowded sector dominated by China’s Uber equivalent, Didi Chuxing. Earlier this week, Alibaba’s mapping unit, AutoNavi Holdings Ltd. also known as Gaode Map, launched its own carpooling business. Last year, Chinese location-based service provider Meituan Dianping rolled out its own ride sharing services as well, and has since expanded its service to seven cities in China.
Ctrip said it started building up its ride sharing platform in 2015 and has partnered with car rental providers eHi Car and Shouqi, or 01Zhuanche, to provide car rental and pick-up service for its online travel users. For example, airport pick-up services will be suggested to a user who has purchased an airplane ticket on Ctrip, or local car rental services will be pushed to travelers based on their destination.
The newly obtained ride hailing license will allow Ctrip to begin its self-operated ride hailing business with its own vehicles, giving the company more control and freedom to secure synergies among its various offerings.
"China’s ride hailing service is a huge market with unlimited business opportunities," said Li Qiao, CEO of Ctrip’s car unit, "Market players have shifted from subsidies competition to service quality competition. Users are happy to pay more for better services. Purely providing subsidies will only deteriorate service quality, harming a firm’s reputation and eventually facing user losses."
As Chinese regulators tightened control of the car-hailing market since 2016, most cities in China require ride sharing vehicles to register with local authorities. And 80% of the cities require companies to employ local drivers with good driving records.
As of 2017, users of ride sharing market in China has reached 225 million. However, there were only 100,000 registered drivers, indicating that many drivers still operate without proper registration, according to data from China’s Ministry of Transportation.