ByteDance jumps into ride-hailing in China with Douyin in monetisation push into local services sector

Chinese short video and social media giant ByteDance is quietly expanding service offerings on the domestic version of TikTok, in its latest attempt to turn the app’s popularity into profit.

Douyin, TikTok’s mainland Chinese version, has started offering ride-hailing services, including T3Go, through its mini-app platform. The move could stir up fresh competition in a market bruised by an onslaught of regulatory crackdowns and pandemic restrictions over the past few years.

That new initiative, first reported by local media site Tech Planet, shows the ambition of short video app Douyin, which has 600 million daily active users in China, to turn into an e-commerce and local services platform.

Douyin’s push into the ride-hailing sector by aggregating services provided by other companies is still at an early stage. The T3Go mini-app – accessible to all Douyin users, but tucked away in a folded menu that takes a few clicks to reach – appears to take reservations only at this point.

Another ride-hailing service, Qiancheng Chuxing, is only available in a few cities of southwestern Guizhou province.

Douyin is looking to work with service providers from a wide range of sectors, but has no plans to launch its own ride-hailing platform, according to a report by Chinese media outlet The Paper, citing people close to the company.

A Douyin open platform spokesperson said in a statement that the company welcomes “service providers and developers from different industries”, and that it aims to connect its users safely with service providers.

Expanding into the ride-hailing and local services sector, an area currently dominated by players such as Meituan and Didi Chuxing, is part of Douyin’s monetisation strategy, according to Jiang Shanmei, a Chinese ride-hailing sector analyst at market researcher Analysys.

“Douyin’s strength [in ride-hailing] is that the app has a huge user base and online traffic. But it lags in ease of use and intuitive design when compared to the ride-hailing functions in online maps services,” Jiang said.

China’s ride-hailing market has gone through a seismic change ever since industry leader Didi came under an unprecedented year-long cybersecurity investigation by Beijing that resulted in a US$1.2 billion fine. The company remains absent in the country’s app stores.

Meanwhile a raft of smaller regional players, including Yangguang Chuxing, Nanjing-based T3Go, and Geely-backed Cao Cao Mobility, have been scrambling for a piece of a growing market that is expected to reach 434.1 billion yuan (US$62 billion) by 2025, according to Guangzhou-based automobile industry consultancy Ways.

“Didi still dominates the ride-hailing market, with Caocao and T3 among the second-tier players, and the competition is now shifting to service quality,” according to Analysys’ Jiang.

Douyin’s move into the ride-hailing sector came after it struck a partnership with several major on-demand delivery platforms, allowing users to place food delivery orders from vendors that set up accounts on the app.

Meituan CEO Wang Xing dismissed Douyin as a serious challenger to his company during an earnings call late last month. While the rival app had “achieved relatively fast growth in [its] local services business … comparing its [gross transaction value] with ours is not an apple-to-apple comparison”, Wang said. He added that Meituan could better meet the needs of its users and merchants.

However, Douyin could provide local merchants with better brand exposure and a stronger pull on new customers, thanks to its huge traffic and recommendation algorithms, according to analysts at China Merchants Securities.

Douyin and rival Kuaishou Technology have already emerged as key contenders in China’s e-commerce market with their live-streaming shopping services. Douyin’s gross merchandise value on the first day of this year’s Singles’ Day shopping festival jumped by nearly 630 per cent from a year earlier.