On the same day that China’s largest ride-hailing app, Didi Chuxing, denied reports of potential government investment in the company, fast-growing rival Cao Cao Mobility announced that it had raised RMB 3.8 billion ($588 million) from a group of state-owned funds, reports the Financial Times. The investment from the Suzhou-based funds aims to accelerate the company’s expansion and improve driver safety.
Cao Cao, which at present operates in 62 cities across China and was started by the automaker Geely, raised RMB 1 billion in its first round of funding three years ago.
Suzhou Xiangcheng Financial Holding Group and Suzhou Innovation Capital are among the five investors placing bets that a domestic rival can challenge Didi’s dominance of China’s on-demand transport sector.
“The government wants tech players to have state-owned money,” said Shaun Rein, founder of China Market Research Group. “Beijing was not happy about Didi trading overseas, with the backing of foreign players including SoftBank and Uber.”