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Sharing Economy

Automakers form 'all-China' alliance on ride-hailing

Joint venture by Changan, FAW and Dongfeng fuel speculation for a full merger

Three of China's biggest automakers want to break into ride-sharing, a service that has quickly gained popularity around the world.   © AP

CHONGQING -- China's Chongqing Changan Automobile is setting up a joint ride-hailing business with compatriots FAW Group and Dongfeng Motor, in a move some suspect could lead to an eventual merger.

The state-run automakers did not reveal how much capital they will funnel into the new business, or how they will split ownership. They will combine their human resources, technologies and funds in hopes of creating an "all-China" team on ride-hailing, according to the Xinhua News Agency.

The trio are expected to jointly develop vehicles specifically designed for ride-hailing, and to jointly manage driving data and other information. Autonomous driving is a potential area of collaboration in the future.

Changan Automobile, FAW Group and Dongfeng Motor entered into a comprehensive partnership in December with four focuses: technology development, parts procurement and manufacturing, overseas expansion and the sharing economy. They agreed earlier in July to collaborate on logistics operations, looking to streamline costs in transporting completed vehicles and parts by rail, sea and rivers.

The companies have traded several top managers among themselves in recent years. Then in late June, Xi Guohua, the president of railcar maker CRRC, became the president of FAW Group. Xi is known for leading the 2015 merger of China CNR and CSR to create CRRC, one of the world's largest train producers.

"Xi's appointment could be a move toward eventually integrating the three companies' management in addition to their business strategies," an industry insider said.

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