Taxi-hailing app raises $600m

Car pick-up apps have been on the rise in China, but many are deemed illegal. The Chinese government encourages innovation in the sector, but it has vowed to crack down on illegal businesses. [Photo/China Daily]

Wang Xiaofeng, an analyst at Forrester Research, said that continued large investment in the sector come as no surprise because the market demand and potential is so enormous.

"Aside from the service they provide to consumers, these apps will also be of great interest to technology companies because of the data collected, which can improve urban logistics," she said.

The emergence of mobile Internet-enabled on-demand service by taxis and private cars poses new challenges to the traditional taxi industry and those in charge of regulating the industry.

The Ministry of Transport announced last week a ban on drivers and private cars without taxi licenses being listed on mobile apps such as Uber, Didi Dache and Kuaidi Dache.

Meanwhile taxi drivers across the country have gone on strike, primarily against high taxi rental fees but also clearly angered by rising competition from private cars made available by these mobile apps.

China regulators promise taxi industry shakeup after strikes