Online travel agency giant granted license to launch lucrative service

Ctrip, China's largest online travel agency, has become the latest entrant to the nation's booming car-hailing market, notching up the already intense competition involving Didi Chuxing, Meituan-Dianping, amap.com and other major players.

Ctrip, which provides services for booking online flights, hotels and tailored trips, announced on Tuesday that it had been granted a license by the transport authority in Tianjin to operate ride-hailing services nationwide, after preparing to launch such services for three years.

In late March, Meituan-Dianping, China's largest online platform for ordering food and booking restaurants, launched car-hailing services in Shanghai. In January, Chinese automaker Geely announced its ride-hailing brand Cao Cao had completed its first round of funding, raising 1 billion yuan ($159 million).

"The revenue of the operators in the domestic car-hailing market is considerable, and the threshold to enter the market is low, and that has attracted new entrants to the sector," said Cheng Shidong, director of the Urban Traffic Office at the Institute of Comprehensive Transportation of the National Development and Reform Commission.

"Besides, the current players are not doing a good job in keeping customers and drivers, and it's easy for them to shift to other platforms, if the new platforms offer better services and subsidies, as there are no significant differences between different platforms. "The new entrants to the market, including Ctrip and Meituan-Dianping, all have capital strength, and they are competitive compared with the original players. In the beginning, platforms will attract users by price competition, and in the long term by providing good services," he said.

By the end of last year, 225 million customers were using car-hailing services in China. However, there were only around 100,000 licensed drivers in the sector, and supply is falling short of demand, according to data from the Ministry of Transport.

Roland Berger estimated in a recent report that the demand from Chinese consumers for car rental and ride-hailing would surge to 37 million trips a day this year, which is around 4.5 times more than in 2015.

Li Qiao, CEO of Ctrip's domestic car-hailing services department, said: "The scale of the car-hailing services market in China is huge, and the sector has significant growth potential."