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Chinese state-owned startup challenges Didi's ride-hailing dominance

State contacts, high-end service and regulatory compliance drives Shouyue's profitability

A Shouqi Limousine & Chauffeur driver and car. The startup has received funding from private investors, including internet giant Baidu and electric vehicle start-up Nio. (Photo by Shunsuke Tabeta)

BEIJING -- Only a year ago, ride-hailing company Didi Chuxing's dominance of China's domestic market seemed impenetrable and few thought its position could ever be challenged.

After years of burning through cash, the company, which is backed by Softbank, Alibaba Group Holding and Tencent Holdings, claimed more than 95% of the total orders of riders after beating out domestic rivals and its acquisition of Uber Technologies' Chinese operations in 2016. But two fatal accidents last year involving Didi's passengers put an abrupt end to its momentum and prompted authorities to tighten industry regulations.

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