Baidu Inc (ADR)(NASDAQ:BIDU), a Chinese investment firm, is taking the lead in raising about $156 million funding for a Chinese Truck App. The largest search engine in China will soon be forging an agreement with Huochebang a Truck Alliance Chinese transport startup. Though a lot of details are still very scarce, fundraising carried out in December obtained a $115 million elevating Huochebang’s valuation to about $1 billion.
The duo’s move comes at a time when close to 40% of China’s trucks have been standing empty. Apparently, more than 80% of goods are still being ferried via roads even though the country largely relies on trucking. This inefficiency has been linked to the fact that close to 90% of the trucks are under individual ownership.
Huochebang’s investment in the trucking industry in China
The Guizhou province-based Uber-like truck logistics start-up has been playing a significant role in China since its inception in 2011. Apart from facilitating truck sales, it has also been giving truck drivers support in finding commodities to transport. The start-up has a registration of more than 2.6 million vehicles and offers support to around 1,000 service centers in China.
Baidu Capital’s managing partner, Wu Wenjie acknowledges, “Huochebang’s team has a deep understanding of the Chinese logistics market….. the company continues to develop and has established a new business model of combining its dispatch platform with a after-sales service platform.”
Huochebang’s competitors
The value of investment in greater China is was at $49.1 billion as at last year. Baidu Capital is currently managing close to 20 billion yuan ($2.9 billion) of funds and it is also seeking to take control of its search and mapping of data.
However, Huochebang must embrace competition from the likes of Yunmanman, its largest competitor. There is also the Alibaba Group Holding Ltd (NYSE:BABA) as well as Beijing-based truck logistics company Fuyoukache, which raised a RMB250 million (US$36 million) series C round from Legend Capital.
Nonetheless, the start-up is optimistic of holding onto its plans. In the meantime, Baidu Capital’s stock closed at $180.06 a fall of $0.17 or 0.09%.
