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August 15, 2016

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Sharing rides: How profit motive corrodes altruism

THE more I ride with car-hailing apps like Didi, Uber and Yidao, the more I get the feeling that this latest fad in the “sharing economy” may be rapidly steering away from its noble origins.

As one step in that possible direction, the Chinese government has just unveiled a new legal framework for what has been a grey-zone in the transport business. Enforcement details have been left to local jurisdictions to publish by November.

Once in place, the new rules will mean that those engaged in ride-hailing services won’t have to hide their activities. Rides arranged via Internet apps will be as legal as standard, cruising taxis. But will ride-hailing then become just another business instead of part of a progressive social movement aimed at breaking down the barriers of old rules and institutions? Can that feel-good state of sharing with strangers really withstand the forces of the profit motive?

For some time, it has almost been unfashionable to take a standard taxi in Shanghai because car-hailing apps were providing more convenient services at a lower cost. Once a loyal taxi customer myself, I was easily turned into a self-appointed ambassador for the “sharing” notion of app-hailing. A driver has some spare time on his hands; I need a ride somewhere. A perfect quid pro quo.

I once pitched Yidao to anyone who hadn’t tried the service. In its most aggressive time of expansion, the company offered cash rebates to the passenger’s account as much as he was charged on it. That meant rides were all discounted by as much as 50 percent.

As an added attraction, customers could select drivers and cars from online photos. At Didi and Uber, the whole process was computerized.

“A customer of mine once joked that he felt empowered and entitled at Yidao, like a modern emperor browsing through a register of concubines he could choose to spend a night with,” said one of my Yidao drivers. “I’d better get a better-looking photo of myself to increase my odds of getting riders.”

I was amused but not alerted to the risk of being treated like a god until I was challenged by a driver whose ride I had cancelled. He was the only driver who answered my request for a ride to the airport during rush hour. But after seeing him driving without a clue around my home for more than 15 minutes on the app, I started to worry about his sense of direction. He was driving a car with an out-of-town license plate, which meant he was barred from taking the elevated ring road short cuts to the airport. I had a flight to catch.

“Come on,” he told me angrily. “You were not blind to my car plate when you picked me.”

When I told him I wanted to cancel the ride and get a taxi instead, he heaped curses and threats on me.

Just as I prepared to file a complaint of harassment against him, I found out that the driver had been fined 200 yuan (US$30) for the cancellation even thought I had advised the Yidao platform that it was my decision.

“That’s cruel,” I thought, casting myself as an arbitrary empress in my mind. “Some get spoiled while others are being mistreated.”

There are some disqualified drivers we simply don’t have the heart to blame.

My friend Yvonne once took a Uber ride with a female driver who couldn’t handle the car’s manual clutch and the car’s engine got a flameout on an uphill.

“It was dark and scary,” my friend told me. “What could I say? ‘Shift back to first, lift the clutch slowly, and then release the brake.’ As I calmed her down I felt like a driving instructor.”

On more than one occasion, I had to act as navigator for Uber, Didi and Yidao drivers because they weren’t as streetwise as taxi drivers and sometimes misread GPS.

They were usually apologetic. I tried to be considerate and tolerant. Still, I couldn’t but miss the old days when cabbies driving like “Fast and Furious” were so reliable that I could almost take a nap during the ride.

True, the costs of hailing a ride are cheaper than those for taxis. I came to think of ride-hailing as buying a drink for friends to thank them for giving me a ride. In the “sharing economy”, there’s a middle zone between professional service and a favor. There is only so much one can ask.

I later discovered, much to my disappointment, that many people who offer rides via Uber, Didi or Yidao do it for a living and they are not necessarily driving their own cars.

“I just rented this car this month,” a Didi driver said of his Roewe 550 plug-in hybrid. “If I can make some real cash with it, I will consider signing a long-term leasing contract next month. And it will be my first serious job in Shanghai.”

At that moment, I felt betrayed, just as I once felt about Airbnb. What is portrayed online as a person “sharing” a spare room with a guest turns out to be a lucrative business for sub-lease landlords. There’s nothing wrong with that from a business perspective, but it does shoot holes in the sense of peer-to-peer sharing that such apps profess to be based on.

The power of the Internet and the emergence of the “sharing economy” have led us to believe that we can ditch faceless corporations like taxi companies and hotels, and find services we need from people-to-people exchanges of under-utilized resources, along with the long lost intimacy and affection.

But even the “sharing economy” is prey to opportunists. I cannot imagine what will happen if Shanghai’s already crowded streets become clogged by full-time ride-hailing cars. Of course, the online platforms that foster these exchanges are becoming billion-dollar companies.

What looks too good to be true may be just that. Ride-hailing can’t afford to keep giving generous discounts to attract customers. The recently announced merger between Uber and Didi, the biggest two car-hailing players in China, may lead to a truce in the long-running price war. In a “winner takes all” market, the true survivors have yet to emerge.

Most of the drivers I have hailed through apps tell me they couldn’t survive without the per-ride subsidies paid by the platforms.

“There is no real ‘sharing economy’ in China’s transportation industry,” said Lu Zhengyao, president and CEO of Shenzhou Youche, the car-hailing arm of Shenzhou Car Rental and a minor market player. “It’s all an illusion built on subsidies.”

As a consumer, a hard-to-please and greedy one at that, my only loyalty is to cost-effectiveness.

I recently ended my love affair with Yidao after its subsidies were drastically cut. It’s not just about the higher price I have to pay. It’s also harder to even get a Yidao driver these days.

As I wondered whether the stalwart taxis of old were about to make a comeback. I came across a labor force survey done by Renmin University. It enlightened me about some of the thinking behind China’s decision to legalize car-for-hire Internet services.

The survey found that 26.7 percent of on-demand drivers on apps are laid-off workers, and 32 percent of them used to work in industries with over-capacity issues, like coal and steel. In other words, the government needed to find employment for those thrown out of work by China’s supply-side reform.

There is an inner contradiction in the “sharing economy,” pitting a sense of altruism against the desire to monetize a virtue. I have come to think of it as a modest rather than a noble cause.

Li Bin, president of Chinese carmaker NextEV, once put his finger on what may be the truth about China’s “sharing economy” when he said most of on-demand services provided by private cars are just self-justified illegal cabs. Only ride-sharing that the driver and passenger happen to go the same direction lives up to the name of sharing.

“In this post-growth era, the bottom line is that we are just eager to make some extra money,” I thought.

Perhaps I should think about making some money as a part-time driver now that it’s become legit? I don’t care to take a detour from my way for my passenger.

Just joking.


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