In China rival taxi apps are engaged in a fierce battle, and Tencent-backed Didi Dache and Alibaba-backed Kuaidi Dache are burning cash in a bid to outdo each other.
After a whole week’s toil, the weekend finally arrives. And like most Beijingers, you let your hair down on Friday night by either catching up with a friend for dinner at a fancy restaurant, watching the latest Hollywood flick or enjoying live music at a popular pub. But the fun comes to an abrupt end when the party goes on into the wee hours of the morning because you suddenly don’t know how to get home. Unless you own a car, you find yourself shivering at the curbside for half an hour or more while desperately trying to stop a cab.
Sounds familiar? Getting a cab can be a huge headache in almost any metropolis around the world, and Beijing, a city with nearly 70,000 registered cabs (not to mention the countless black cabs) running on the road each day, is no exception. There appears to be a supply-demand imbalance. Sometime back if you had to catch a flight early in the morning or needed to get somewhere urgently, you had no other option but to rely on the city’s official taxi operation system, which, ironically, is not so reliable after all (passengers need to pay an extra booking fee without a guarantee of the cab coming at the due time).
But that the supply-demand imbalance is sometimes weirdly skewed. On some days you see busy office-goers in Beijing’s bustling Central Business District fighting to get an empty cab, whereas on the other hand, you can also see drivers spending hours straying around aimlessly.
Smart entrepreneurs jumped at the opportunity, and taxi-hailing apps such as Yaoyao Taxi, Didi Dache, Kuaidi Dache and Dahuangfeng Taxi sprung up and grew at an expeditious pace. According to reports from Enfodesk and sootoo.com, the total number of registered taxi-hailing app users reached 150 million in Q3 2014, a huge growth from the 21.6 million in 2013. Among the handful, competition between two of the biggest players—Didi Dache and Kuaidi Dache—is especially stiff. In a sense they mirror the rivalry of their key investors—gaming and social media giant Tencent (which backs Didi Dache) and e-commerce giant Alibaba (a major investor in Kuaidi Dache). In the beginning of 2014, Didi Dache and Kuaidi Dache pulled out all the stops in a “cash burning” war that aimed to attract users by doling out cash discounts to drivers as well as passengers. Passengers, of course, did not care much about which apps they were using but simply followed the best deals. Both Didi Dache and Kuaidi Dache swore that they would outweigh each other’s discount by RMB 1. Wars are always brutal, this one was exceptionally so. It is reported that both Didi Dache and Kuaidi Dache burned nearly RMB 3 billion by way of discounts during the first three months of 2014.
Along with the cash-burning war came controversies. When the apps were launched, a bidding function was programmed within them so that users could voluntarily pay some extra money to get a cab faster. It might sound reasonable, but the government claimed that gradually, drivers would choose the most lucrative orders only, and passengers who prefer to pay the actual fare might get discriminated against.
Secondly, in order to get the best deals, some drivers use more than one app (smartphone) at a time, which distracts them and can be a potential traffic hazard. It was also alleged that app developers’ lack of scrutiny and regulation would give room to “unlicensed taxi drivers” (drivers who do not own operating permission from the local government).
In order to control the potential risks, some local governments reacted immediately and issued new policies. Others, such as Suzhou and Shenzhen, even implemented a ban on these kinds of apps.
But how are these apps doing today? Take a look at our infographic below to learn more about the dynamics of this fast-changing market.
NOTE: This piece only covers apps that allow passengers to hail official government-registered cabs. This does not cover apps that allow users to hail private cabs.
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