Didi becoming just another cab firm after Uber buyout

PASSENGERS of China's ride-hailing giant Didi Chuxing are finding they have to pay higher fares for their trips after the company's buyout of Uber China. Beijing News commented on Wednesday:

Public concerns about price increases are justified. Although hard to accept, in reality the company is becoming just another taxi company.

Travis Kalanick, CEO of Uber, says Didi Chuxing has good reasons for raising its prices. It has invested billions of dollars in the Chinese market and has not yet made a profit. The company has to find the price point at which it can make a profit.

Aswath Damodaron, finance professor at the Stern School of Business, New York University, publicly stated in an academic debate about Uber in 2014, that Uber's business model is not clear, and it might almost be said it has none. This view can also be applied to Didi Chuxing.

Didi Chuxing has employed a loss-bearing competitive strategy over the past few years. The basic logic of this strategy has been to occupy the market by subsidizing drivers so passengers pay less for their rides, then raise prices on becoming the dominant business. However, except for one-time charging for rides, it is difficult to identify any other stable source of income.

Passengers expect ride-hailing services to reduce their travel costs, but now the opposite may happen.