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Uber's Chinese Rival Didi Kuaidi Funds Uber's U.S. Rival Lyft

The Chinese ride-hailing service is trying to slow Uber down by fueling its competitors.

Lam Yik Fei / Getty Images

Uber may have met its match in its Chinese rival, Didi Kuaidi. In Didi’s latest move, the Asian ride-hailing service invested an undisclosed sum in Uber’s American rival, Lyft, as first reported by the Wall Street Journal. Didi’s own investors, Chinese media conglomerate Tencent and e-commerce company Alibaba, also joined the round.

The investment follows closely behind Didi’s backing of Uber’s Singapore competitor GrabTaxi in August.

Didi is trying to slow Uber down by fueling its competitors. If Uber is forced to pay more attention or plow more money into other places, that’s less it can spend fighting Didi in China.

The rivalry between the two heated up in recent months after Didi raised an additional $3 billion in investment and Uber closed its $1 billion China fund. The duo are grappling over the Asian market, which is a potential goldmine with its 1.3 billion people.

Investors who follow the space believe it will be winner-take-all thanks to the network effects: The company with the most drivers will have the shortest ride wait times and therefore attract the most passengers. Also, drivers will want to work with the app that has the most passengers because then they’ll book the most rides. Didi is in the lead now, but Uber is fighting to reverse this effect with huge discounts and bonuses for passengers and drivers.

For both companies, winning in China is a matter of survival. Uber needs growth in China to be able to give returns to its latest-stage investors, while Didi Kuaidi’s only market is China. Didi is spending big in order to protect it’s base of operations.

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