The internet logistics firm, Manbang, raised almost USD 2 billion in the first investment round after the merger between Yunmanman and Huochebang that created it.
The merger took place in November 2017. The two competitors offering Uber-like truck services decided to finally merge after much deliberations, creating the Manbang Group. Both platforms matched available trucks with potential clients, reducing fruitless running of trucks and boosting efficiency and speed of transactions.They fought a fierce battle in a domestic trucking market estimated to be worth USD 753 billion. The merger has made them the dominant player in the industry.
Many important names have invested in the company, the main ones being China Reform Fund and the Japanese bank, Softbank. Google, Farallon Capital, Ward Ferry, Yangguang Insurance, K11 Investment, Agricultural Bank are among the secondary investors. Other players like Tencent, Hillhouse Capital Group, Eastern Bell Venture Capital, Xianghe Capital and Genesis Capital have also invested in the new group. Thanks to this investment, the group is expected to explore new markets and expand their activity to sectors like self-driving cars and new energy.
The number of active trucks that cover routes between Chinese provinces is around 7 million. More than 5 million of them are members of Manbang. There are approximately one million and a half logistic companies in China and 83 percent of them are also members of Manbang. For example, a big logistics company such as Debang needs to resort to on-demand services in 20 percent of their shipments. In this sector, these services were known to be expensive and problematic. Yunmanman and Huochebang arrived on the scene to solve this headache for logistics companies and that is why they were very succesful.
Both Didi and Manbang have a similar business concept of connecting cars and clients and trucks with companies. Both have become semi-monopolies and have similar investors. The leader of the former Yunmanman and current chairman and CEO of Manbang Group is Wang Gang, who is also an investor of Didi. He pushed for the merger and invested USD 100 million in the first investment round. Softbank, which is said to have invested USD 1 billion in Manbang, invested 5 billion in Didi last year. Didi recently launched the ambitious Didi Auto Alliance, a platform that teams up with 31 auto partners and seeks to redefine car ownership in a future in which Didi will coordinate an entire system of shared automobiles that will not be Didi-owned or private individuals. Didi would focus on designing cars that will be used for sharing. Didi's future strategy shares many concepts with Manbang. Since they have common investors, similar expansion plans and face the same challenges, a merger between Didi and Manbang was not unthinkable.
Both Didi and Manbang are struggling to become profitable after burning billions of dollars in the last few years. Manbang started to charge a fee to its users one month after the merger. This caused protests from users, but in the long term strategy, Manbang's decision is understandable. Given their dominance over the market, they can afford to charge a fee to their users. Also, considering their almost monopolistic control, they are expanding their activities to other sectors such as insurance, gas stations and financial products for their drivers. This is similar to Didi’s strategy, who is using its huge database to offer loans to drivers and has recently launched Dishuidai, a loan platform for its users.