Strikes put focus on driver services

Car-hailing apps cause country to debate taxi monopoly, passengers' choices and convenience

Simply text a few commands on your smartphone, and a top-of-the-range car arrives within minutes to take you to your destination. But the services provided by private car drivers through car-hailing apps are facing a clampdown after large-scale taxi strikes across the country.

The strikes have put under the spotlight calls for a crackdown on the monopoly of taxi firms to provide such services, as well as a discussion on whether passengers should have more choices, including hiring private cars through apps.

The strikes started in Shenyang, capital of Liaoning province, on Jan 4, and have spread to cities including Nanjing, Jiangsu; Chengdu, Sichuan; Changchun, Jilin; Jinan, Shandong; and Nanchang, Jiangxi.

Thousands of cabbies have expressed frustration over reduced income and intensified competition as a result of apps including Didi Dache, Kuaidi Dache and Uber, which allow anyone with a car, but without needing a taxi license, to carry passengers for a fee.

Under current regulations, private car drivers or vehicles without taxi licenses cannot take passengers for profit. Taxi drivers are required to rent authorized taxis from licensed companies and pay rental fees that are often criticized as exorbitant.

Since the car-hailing apps were introduced in September 2012, many Chinese have questioned the system of franchising taxis.

Monthly taxi rental fees are between 7,000 yuan ($1,100) and 9,000 yuan in Nanjing, where strikes continued for several days.

"I handed in more than half of my monthly earnings for the rental fees, but now private car drivers can run a taxi business without paying any money," said Liu Mou, a taxi driver who took part in the Nanjing strike.

"It is unfair that I pay a considerable amount for the right to drive a taxi, while a private car owner is allowed to have the same right for zero cost," he added.

A 44-year-old private car driver caught running a taxi in Beijing admitted that he made a net profit of about 25,000 yuan last month. His profit was more than double that of a licensed taxi driver because he had no rental fees or taxes to pay.

Operators of illegal taxis can be fined up to 20,000 yuan, but drivers have little fear of the penalties because the business is lucrative and they cannot be easily detected.

With sufficient funds from investment companies, the app developers are spending money on sending coupons to passengers and private car drivers. This has posed a threat to taxi drivers who are charged high rental fees but provided with low-quality cars.

At the moment, there are two main players in the country's car-calling market: Didi Dache backed by Alibaba and Kuaidi Dache backed by Tencent. The two companies account for almost 99 percent of the market, with 154 million registered users in more than 300 Chinese cities in the third quarter of last year.

The Transport Ministry recently ordered all taxi-booking apps to stop allowing private car drivers or vehicles to offer taxi services.

While, for the moment, those in the mainstream taxi industry may be relishing the fact that the transport authority has sided with them, few believe that it has delivered a knockout blow to their rivals.

Convenient apps

"The apps are very handy for me. I have been hiring private cars using Didi Zhuanche and Yidao Yongche apps for more than half a year," said Zhang Lei, a 34-year-old journalist in Beijing. "I have suffered enough waiting in the bitterly cold wind for a taxi for half an hour."

She said hailing a taxi in Beijing is inconvenient. "I often finish work late. When I come out from my office around 10 pm, it can take me more than half an hour to find a taxi.

"A private car is much easier to hire through apps. Drivers nearby my office can easily find me and additional services such as WiFi, mineral water and tissue paper are available in the private cars."

Zhang said she believes that the apps, as well as "black cabs" - drivers operating private cars as unlicensed taxis - have become popular because services monopolized by a limited number of taxi companies have failed to meet the demand of the expanding urban population in megacities such as Beijing.

According to a recent survey by Xinhua News Agency, 75 percent of almost 200 respondents believe the market monopoly is the major cause of the taxi industry's tension and poor services, such as long wait periods or being refused rides.

Due to these unsatisfactory experiences, 77 percent of respondents said it is highly necessary to break that monopoly. Meanwhile, they are looking forward to new services enabled by mobile Internet technology. Among the respondents, 25 percent said they regularly use ride-call apps. Another 21 percent said they use such services occasionally.

Lawmakers in Liaoning discussed the abolition of taxi rental fees at the province's top legislator's meeting on Wednesday and reviewed a draft of a reform of taxi franchises.

The franchises for running taxis are owned by governments. Common practice in the industry is for companies to purchase taxi licenses from the government and then sell the right of running taxis to drivers and rent cars to them.

In Shanghai, each license costs 500,000 yuan for a 50-year franchise. In Shenzhen, 350,000 yuan is required for a 14-year franchise.

Wang Zhujun, a deputy head of the Commission of Transport in Jiangsu, said the pricing mechanism for taxi rental fees is complicated. The price is negotiated between taxi companies and drivers and written into their contracts after being approved by the local government.

"According to regulations, the city's pricing authority has the final say in the rental fees. We will talk with pricing and treasury departments to make the pricing process more transparent to the public," he said.

In 2013, the average monthly income of taxi drivers in Shanghai was 6,655 yuan, and the average monthly income for each taxi for a company was 8,025 yuan. A hearing on increasing taxi fares was held in Shanghai on Thursday to increase the income of drivers.

Regulations debated

Liang Jianwei, a deputy director of the Beijing Commission of Transport, said the authority is deliberating laws to regulate the taxi business. He said taxi services provided by private drivers are strictly prohibited.

Liang said the authority will continue to try to curb the rampant use of apps to hire private cars, but the use of taxi-hailing apps to hire legally registered taxis is encouraged.

"To put it simply, black cab services are illegal no matter how the drivers solicit passengers," he said.

The Beijing Commission of Transport sent 10 inspection teams last week to popular destinations including Beijing Capital International Airport to catch cars providing taxi services without a license. The airport team detected four to five illegal cabs each day.

The Shanghai government detained 12 private drivers using taxi-hailing apps via Didi Dache, and fined each driver 20,000 yuan in December. At the same time, Uber's office in Chongqing was investigated by police regarding the issue of unlicensed drivers.

"I have no objection to the fact that the car-calling industry should be regulated, but it is hard for me to be supportive of a complete ban on private car services," said Zhang, the Beijing journalist.

She said the authorities need to address the imbalance between the huge demand for car services and the limited number of taxis in major cities, while exerting a tough policy on apps, especially in an environment in which the majority of residents are deprived of the right to purchase cars in Beijing, Shanghai, Guangzhou and Tianjin.

zhang_yi@chinadaily.com.cn

A coupon worth 5 yuan (80 cents) from Didi Dache is shown by a resident of Shenyang, Liaoning province. Such coupons can be used to pay when using the service. Li Gang / Xinhua

(China Daily 01/16/2015 page6)