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July 7, 2015

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Home » City specials » Hangzhou

Ride-hailing companies stir up the market

By Xu Wenwen | July 7, 2015, Tuesday | Print Edition

ALTERCATIONS broke out again last week between drivers of ride-hailing companies Uber and Didi Kuaidi and mainstream cabbies, requiring police intervention.

It was the latest in a series of conflicts caused by taxi drivers claiming the private car ride companies that pick up passengers through smartphone apps were hurting their business.

First, there was a small strike by taxi drivers. Then a cabbie cornered an Uber car, triggering scores of other Uber cars to come to its aid. Three drivers involved in that showdown were fined more than 10,000 yuan (US$510) apiece.

Money is at the root of the continuing dispute.

“I earned over 7,000 yuan a month last year,” said Hangzhou cabbie Liang Yanan. “My income has been falling. Last month it dropped to 4,000 yuan, even though I worked longer hours.”

He and his compatriots blame ride-hailing apps Uber and Didi Kuaidi for their income loss. Didi Kuaidi is backed by Tencent and Alibaba, China’s dominant Internet companies.

Some of the ride services provided by the peer-to-peer app services are cheaper than taxis.

Uber entered into China last spring. In Hangzhou, its People’s Uber service features no flag fare and each ride costs 1.9 yuan a kilometer. There’s a minimum requirement of a 10 yuan ride, but discounts have been known to occur.

The Didi Kuaiche service operates along the same model. Its minimum fare of 5 yuan rose to 8 yuan last week, but it continues to attract riders by providing discount coupons.

The apps are convenient for many passengers because they are available 24/7. By contrast, some mainstream cabbies are known to be hard to find during rush hours when drivers change shifts.

Still, these cab-hailing apps are technically illegal, says the Hangzhou Road and Transportation Management Bureau. Some 150 app cars have been fined this year.

“But it’s difficult,” a bureau official said, “because they look just like private cars.”

According to Uber Hangzhou, the number of its drivers in the city, which has more than 10,000 regularly licensed taxies, has reached 70,000.

The financial incentive of offering a private car for ride services has fueled the army of Uber and Didi Kuaidi drivers.

As additional sweeteners, Uber offered drivers subsidies of almost 3.5 times ride fares earlier this year, and Didi Kuaidi used to give drivers bonuses equivalent to each ride fare.

Regular cabbies have to pay fees to their city-controlled taxi companies to rent the cars they drive. Those fees are 200 yuan for a car on the day shift and 160 yuan for the night shift.

“It’s really unfair to make us compete with them,” Liang said. “The government should decrease our rent, or ban the app hailers just as the French government did.”

Uber has been under attack in several countries where it operates. In France, Uber directors have been charged with “misleading commercial practices, complicity in the illegal exercise of the taxi profession and illegal use of private data,” according to AFP.

The Hangzhou Road and Transportation Management Bureau told Shanghai Daily it is currently working on regulations targeting the ride-hailing apps.

The continuing dispute and loss of income have forced some cabbies to leave the industry already. Hangzhou Zongrun Taxi Co, which owns thousands of cabs, has had more than 80 cars returned in recent months, despite rental contracts that stipulate 20,000 yuan penalties for early terminations.

Taxi driver Wang Biancheng told Shanghai Daily that some 200 taxis are parked in the company lot because drivers cannot be found.

However, business is booming in Hangzhou’s used car market as people rush to join the app driving services. Cars serving People’s Uber and Didi Kuaiche are required to be valued at more than 100,000 yuan.

“Many people ask me if a given car is good for Uber or Didi Kuaidi driving,” said one used-car dealer. “There aren’t all that many of them available.”

The cabbies’ plight doesn’t mean a smooth ride for Uber and Didi Kuaidi drivers.

After incentives and subsidies for Uber and Didi Kuaidi taxi-hailing drivers were pared back, the number of drivers dropped.

“Giving a subsidy is one means of marketing,” said Ye Yun, public relations director for Didi Kuaidi. “We adjust the sums according to demand and supply.”

Last month Uber Hangzhou deactivated about 1,000 drivers who were accused of faking bookings to get subsidies. Hundreds of outraged drivers circled its office, smashing a glass door.

Didi Kuaidi’s Hangzhou office said it has deactivated hundreds of driver accounts.

App drivers have proven to be cunning. Some operate multiple phone numbers and therefore multiple Uber accounts. Drivers use one number to act as a rider and request a lift, and then accept the trip as a driver with another phone number.

Didi Kuaidi said it plans to develop a service specially tailored for public servants. Dates, times and destinations will be meticulously logged so that a government department has proof that transportation funds were legally spent, should they ever come under the scrutiny of anti-corruption police.

Hangzhou


 

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