This article is authorized for reprint from Chuxingyike (WeChat Official Account ID: carcaijing), created by the Traffic Industry Group of “Economic” magazine. Author: Li Xiyin. Editor: Shi Zhiliang.
Cao Cao allied with Dongwu, Love & Peace; As the pattern of one power and many strong changes, War is coming.
Jiangsu Suzhou, originally belonged to Wu County of Dongwu in the Three Kingdoms period. In 208 AD, Cao Cao led his army south, preparing to unify China…
On September 6th, 2021, Cao Cao Chuxing raised RMB 3.8 billion yuan in Series B financing, breaking the record of the largest single financing in China’s online ride-hailing industry for the past two years. Interestingly, there is the shadow of “Dongwu” among the investors. From then on, Cao Cao Chuxing seems to have realized its dream of joining hands with Wei and Wu.
Cao Cao Chuxing was founded in 2015. According to official data, Cao Cao Chuxing has entered 62 cities with monthly active users (MAU) reaching 5.679 million, a year-on-year increase of nearly 140% compared with the same period last year. According to Cao Cao Chuxing CEO Gong Xin, with continued refined operations, the number of registered users has exceeded 60 million.
Three and a half years between financings, is it slow? Did you miss many opportunities? Some answers can only be found by extending the time horizon. As strict compliance becomes the Damocles sword of competition in the online ride-hailing industry, traditional economies of scale and subsidy wars are no longer effective. Systematic integration capabilities have brought development opportunities to scale enterprises.
Professor Ji Xuehong, director of the Automobile Industry Innovation Research Center of North China University of Technology, told Chuxingyike (ID: carcaijing) that when Didi faces data security and compliance inspections, cracks appear in the traditional one-dominant-industry pattern. Therefore, after data compliance, strict reviews of road qualification, and other aspects are inevitable. Against this background, ride-hailing companies with traditional automotive industry backgrounds that excel in compliance have great opportunities for rapid development.
For the online ride-hailing industry and the car companies that need to layout travel, the case of Cao Cao Chuxing is worth studying.
The difference between fast and slow, and being a time-conscious friend
For the online ride-hailing industry, Cao Cao Chuxing’s large financing has brought warmth to the cold winter.
RMB 3.8 billion yuan. As the first equity financing in the industry this year, it also broke the record for the largest financing in nearly two years. The official endorsement brought by the Suzhou Local Industry Investment Company among the five investors is even more significant for the online ride-hailing industry, which now emphasizes compliance.
The last financing round of Cao Cao Chuxing was a RMB 1 billion yuan Series A round completed in January 2018.# Heading
Outbound (ID: carcaijing) initially thought that follow-up financing would come one after another, but three and a half years have passed. It has been learned that different capital parties have expressed investment and acquisition demands during this period, but Geely has always believed that Cao Cao Travel has excellent qualifications and has adhered to standards in operation, waiting for opportunities.
Li Shufu, Chairman of Geely Holding Group, frankly stated that at the beginning of its establishment, Cao Cao Travel adhered to two original intentions: one is to insist on being a new energy travel platform, and the other is to insist on being a B2C platform that complies with laws and regulations. These two original intentions have not changed to this day.
It is needless to say that due to the strict regulation of data security by Didi, the relatively rigid online ride-hailing market has been reshuffled and ushered in new vitality, and all scale enterprises have ushered in good development opportunities.
“Marketing and subsidies alone will not win the market in the future.” Gong Xin, CEO of Cao Cao Travel, told Outbound (ID: carcaijing) that high-speed growth in the past few months was due to internal and external reasons. Internally, it included the investment in manpower and technology in managing drivers and improving service experience. Externally, the country advocates standardized operations and benign competition, allowing Cao Cao Travel to attract more new drivers.
Gong Xin said that the B round of financing will help the company increase investment in key work such as technological research and development, business expansion, service quality improvement, and driver protection, thus further enhancing the company’s competitiveness and expanding market share.
Cao Cao Travel proposes to build a system capability, namely the “N3 strategy”. “N3” (N Cube) refers to New Car (customized car), New Power (new energy), and New Ecosystem (ecological system), respectively. The “N3 strategy” proposes that Cao Cao Travel will rely on the two major advantages of Geely’s large travel ecology and Suzhou’s industrial ecology to create a development plan for integrated travel.
Dong Wei, Chairman of Agricultural Bank of China International Suzhou Company, said that in terms of data information security and passenger service, Cao Cao Travel has always been an outstanding benchmark in the industry. Cao Cao Travel is positioned as green travel, which conforms to the current environmental protection development concept and will help promote the shared travel industry to develop in an environmentally friendly, economical, and efficient direction.
Luo Zhenyu said: “Only long-termists can become friends of time.” Zhang Lei said: “Long-termism is not only a methodology, but also a value. The winner is not the one who rushes to the front, but the one who keeps going.” Chen Chunhua said: “The more changes, the more long-termism is needed.”
We hope that the industry will not be dominated by one company, but like Wei, Shu, and Wu, can share and develop this market with other partners. This is the first logic named by Cao Cao Travel.The director of the Automotive Innovation Research Center of North China Industrial University, Professor Ji Xuehong, told the Carcaijing account that the traditional dominance of the industry is being challenged due to the cracks exposed in the face of Didi’s compliance and data security checks. At the policy level, China is the first country in the world to recognize the legal identity of ride-hailing services. However, as a supplementary tool for public transportation, the quantity of ride-hailing services needs to be strictly controlled, and the priority is to develop intensive public transportation services. Therefore, after achieving compliance, strict examination of road qualifications and other aspects will be inevitable. Against this background, ride-hailing companies from traditional car enterprises that have a compliance advantage have a great opportunity for rapid development.
Compared with 2017, the frequency of financing activities in the ride-hailing industry has decreased, but Caocao Travel’s financing of RMB 3.8 billion indicates that the ride-hailing industry still has great development and transformation potential based on the strong consumer demand for transportation services. The market outlook is broad.
Returning to Suzhou- The Strategic Plan for High-end Intelligent Manufacturing
Through the cooperation between Caocao Travel and Suzhou, we can discover Suzhou’s official industrial development plan. As a traditional manufacturing city, Suzhou should be optimistic about the future of the industrial internet economy, investing heavily in internet travel platforms incubated by OEMs.
Suzhou has a history of more than 2,500 years and is a historical and cultural city with a good industrial foundation and distinctive openness.
In recent years, Suzhou has been focusing on high-precision and advanced industrial economy, and public data shows that in the first half of this year, the city’s GDP was RMB 1.07 trillion, a year-on-year increase of 14%, which is the fastest growing rate, far exceeding the national average of 12.7% and Jiangsu province’s 13.2%.
In terms of industrial development, the output value of Suzhou’s automobile and parts industry is nearly RMB 200 billion. Suzhou is also one of the first pilot cities for 5G networks in China, the first pioneer region for vehicle networking in the province, the first digital traffic demonstration zone, and the first gathering zone for blockchain industrial development. In February of this year, after approval by the State Council, the NDRC issued the overall plan for the construction of Hongqiao International Open Hub, proposing to create Suzhou’s Xiangcheng vehicle network pioneer zone.
At the press conference, Xu Kunlin, member of the Standing Committee of the Jiangsu Provincial Party Committee and secretary of the Suzhou Municipal Party Committee, proudly said: “The development of the intelligent connected vehicle industry in Suzhou has provided unprecedented opportunities. Caocao Travel, as a strategic investment for Geely’s intelligent automotive ecosystem, has gradually become a benchmark brand in the domestic intelligent connected vehicle industry.”According to CarCaijing (ID: carcaijing), negotiations between Caocao Chuxing and Suzhou proceeded very quickly among various local governments and investors. On one hand, Suzhou’s excellent business environment provided great policy support to Caocao Chuxing, with Suzhou Xiangcheng district fully meeting the needs of enterprises and being very enterprise-oriented in the overall business environment. On the other hand, Suzhou has advanced vehicle networking technology, a rich autonomous driving industry cluster, and many of Geely’s industries are also stationed in Suzhou. This will help both parties to deepen their cooperation.
Geely’s Support
Caocao Chuxing’s informal name is Geely, which is why it was named Caocao Chuxing. Vice President Zhao Ke of Caocao Chuxing told CarCaijing (ID: carcaijing) that Geely Holding will continue to provide us with support in various aspects of the ecosystem and resources throughout our development process, and in the B Round, it has also updated its endorsement and resources.
Lu Zhidong, chairman of Investment Side City Financial Holding, said that Caocao Chuxing’s shareholder background is excellent, and he is optimistic about its good interaction foundation with Geely’s ecosystem. At the same time, as an investor, he values the operational management team’s ability to operate.
Caocao Chuxing is invested and controlled by Geely Technology Group Co., Ltd. According to CarCaijing (ID: carcaijing), Caocao Chuxing has been transferred from Geely Technology’s territory to the controlling group.
At the same time, Caocao Chuxing has also carried out more in-depth work. With the increasing number of investors and cross-industry and cross-company coordination, Chairman Liu Jinliang and CEO Gong Xin, two old and new Geely personnel, have formed a team, with one deepening communication with the board of directors and one in charge of specific company operations.
A person close to Caocao Chuxing told CarCaijing (ID: carcaijing) that Chairman Li Shufu now has more interest and energy to take care of every child in his hands.
Caocao Chuxing has always been an important lever for Geely’s transformation from a car manufacturer to a technology company.
CarCaijing (ID: carcaijing) provides an example of Geely’s acquisition of London’s manganese copper taxi, which made Geely and Caocao Chuxing realize that in order to provide good passenger transportation services, the customized hardware support concept is needed; London’s taxi dispatch system and operation model also provided precedents for Caocao Chuxing in system construction. In CarCaijing’s (ID: carcaijing) view, based on the large amounts of structured data from ride-hailing companies, it is also the best experimental field for new energy, autonomous driving, and connected vehicles.
Looking at the penetration rate of ride-hailing in Chinese cities, the highest penetration rate is in first-tier cities, reaching 50.3%, followed by new first-tier cities at 20.3%, and lower penetration rates in second-tier and lower-tier cities, which are still less than 10%.In the past two years, the growth rate of China’s shared mobility has slowed down, and the penetration rate of shared mobility is still less than 10%. Cao Cao Mobility CEO Gong Xin believes that behind the seemingly contradictory situation, companies need to switch to a new engine of development – from single-dimensional competition to ecological system competition.
Gong Xin pointed out that from 2015 to 2020, the development of shared mobility was at the 1.0 stage, and the core strategy of the 1.0 stage was to improve driver efficiency, especially in terms of driver and passenger matching efficiency. In the 2.0 stage, the entire industry chain needs to be upgraded, and the development of shared mobility 2.0 needs to be driven by the advantages of the vehicle, energy, and driver ecology.
Although many shared cars running on the road are still private cars, in fact, they have many different experiences and requirements from dedicated shared cars in terms of vehicle acceleration performance, interior luxury, sound quality, etc. When designing dedicated shared cars, the cost can be greatly reduced, and the design perspective should also be shifted from the car owner to passenger experience, such as the experience of opening and closing the car door, entering and leaving the vehicle, and the space in the back seat.
With the manufacturing advantages of Geely, the first customized shared car called Maple Leaf 80V was launched in March this year and will soon be used on the Cao Cao Mobility platform. With the Maple Leaf 80V, drivers can complete battery replacement in one minute, saving charging time of up to two hours. The energy consumption per kilometer is 0.18 yuan, half that of gasoline cars. Compared with charging cars, drivers can earn an extra 2,000-3,000 yuan per month. In addition, through the sale of vehicle-electricity separation, combined with peak shaving, filling valleys, and photovoltaic power generation, not only can energy costs be saved, but battery life can also be increased. This not only reduces the cost of owning a car for drivers but also increases capacity and competitiveness.
Ji Xuehong also added that for these companies, customized shared cars and energy recycling circles do help deepen their moat, but whether they can achieve the same effect as ride-hailing services did with mobile payments and LBS technology to overturn the traditional taxi industry remains to be observed.
Three years ago, in the office of Cao Cao Mobility’s Chairman Liu Jinliang, I saw a hand-drawn picture that says “power echoes in the wind.” This is Li Shufu’s casual daily practice, which implies that doing long-term and valuable things will be empowered by countless forces.
This time, Cao Cao Mobility has caught the wind, waiting for the future.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.