SAN FRANCISCO (Reuters) - Car-hailing company Lyft announced on Wednesday a partnership with China’s largest ride-hailing company, Didi Kuaidi, that allows each company to serve the other’s passengers and aligns them against a common competitor: Uber.
Lyft users traveling in China will have access to the Didi Kuaidi app and Didi Kuaidi clients will have the option to use Lyft’s services in the U.S., company executives said at a joint press conference in New York City.
Didi Kuaidi President Jean Liu said the partnership, which goes live early next year, opened “a brand new era for the global rideshare industry.”
Lyft Co-founder and President John Zimmer said Didi Kuaidi invested $100 million in the San Francisco-based company as part of a financing round led by Japan’s Rakuten earlier this year that also included activist investor Carl Icahn, Alibaba Group and Tencent Holdings.
The companies will take advantage of each other’s knowledge of local regulations, especially important in China, which has stymied many tech companies’ attempts to enter that market, and share new technology and products.
The partnership gives both companies their first opportunity to serve ride-hailing passengers when they travel overseas and allows them to pay for rides in their native currency. Lyft, the No. 2 U.S. service and in about 65 U.S. cities, has delayed expanding internationally, despite saying in early 2013 that it would be a global service by the end of the following year.
Zimmer said the partnership allows Lyft to bring its app to international travelers while focusing its resources on important domestic markets, such as New York City.
“Our calculation for the Chinese market is this is absolutely the winning strategy,” Zimmer said in a phone interview following the press briefing.
Other companies can’t match Uber’s coffers, which have been filled with about $5.6 billion in equity funding that pegs the company’s valuation at $51 billion. As Uber tackles the world alone, analysts say the remaining companies will look to each other.
“I wouldn’t be surprised if GrabTaxi and Ola were also part of this partnership to bring India and South East Asia into the mix,” said Aswath Damodaran, an industry analyst and professor of finance at New York University’s Stern School of Business.
Lyft has raised $1 billion with a valuation of $2.5 billion.
Zimmer declined to answer a question about partnerships with other companies.
Although Didi Kuaidi remains the dominant ride-hailing app in its home country, Uber is a threat there, too. Uber recently closed a $1.2 billion deal to enter 100 more Chinese cities in the next 12 months.
Didi Kuaidi, however, is set to raise a funding round of about $3 billion, sources told Reuters earlier this year. It’s valued at $16 billion.
Reporting by Heather Somerville in San Francisco and Kylie Gumpert in New York; Editing by Christian Plumb and Diane Craft