Lyft teams up with Uber's No. 1 rival in China, Didi Kuaidi

Kaja Whitehouse | USA TODAY

In an effort to beat back the dominant ride-hailing company, Lyft is ganging up on Uber by partnering with Uber's No. 1 rival in China.

On Wednesday, Lyft said it has partnered with Didi Kuaidi to share resources and technologies — and money.

The two companies will launch "cross-platform interoperability" so that Lyft users can more easily use Didi when travelling in China and vice versa, the companies said at a joint press conference in Manhattan Wednesday.

It's not just talk. Didi, which is backed by government entities, including China’s $740 billion sovereign-wealth fund China Investment Corp., has also made a $100 million strategic investment in Lyft, the companies said.

Despite its dominant position in the profitable business of pairing riders with drivers through a mobile app, Uber has lagged in China due to competition from Didi Kuaidi, which is the dominant player there. Uber CEO Travis Kalanick recently announced plans to ratchet up Uber's efforts to make headway in China, which is seen as one of its most important markets for global dominance.

Didi's partnership with Lyft escalates its competition with Uber, which is the richest of the ride-sharing companies, with a valuation of $51 billion — more than the market capitalization of Yahoo and General Mills, the maker of Cheerios.

Didi is valued at $12 billion after closing a round of fund recently that included additional money from Chinese e-commerce giant Alibaba. Lyft is valued at a mere $2.5 billion, but it has recently attracted financial support from tough Wall Streeters, including billionaire hedge fund manager Carl Icahn, who has invested $100 million.