Internet & Tech

Fare game?

Customers frustrated by Didi Chuxing’s festive price hikes

Didi-w

Didi drivers are in shorter supply

The coming of the Lunar New Year in China is always heralded by images of millions of travellers cramming into train stations as they begin their long journeys home for the holiday. Less circulated are the photos of China’s major cities enjoying rare moments of calm after the chaos has passed.

This year, according to the China National Tourism Administration, there were 344 million “domestic tourist trips” during the seven-day break, a 13.8% rise on the year before. A further 6.15 million Chinese opted to go abroad, and the mass exodus left the centres of cities like Beijing and Shanghai relatively deserted.

In some ways the quiet was a welcome respite for those who decided to remain, but the exodus brought undesired consequences too. Namely that it quickly became “too hard and too expensive” to find a taxi. And Didi Chuxing – the on-demand service that has established a virtual monopoly since buying out rival Uber China last year – endured the brunt of consumer fallout for this inconvenience.

The majority of Didi’s drivers in the larger cities are rural migrants, so the holiday created a sudden dearth of available drivers. This caused Didi’s fares – which operate on a price-surging model similar to Uber’s – to increase. According to a report from TMT Post, a portal, the cost of making a Didi journey in Beijing had doubled even before the national holiday period began. Another customer told the news broadcaster STV that the cost of her rides in Shanghai had risen tenfold in the prelude to the new year.

Frustration at the price hikes was enough to warrant one critic on Zhihu – China’s Quora – to explain why it had become so hard to get a ride. According to him, the date of the Lunar New Year was the “earliest” for five years, causing a greater “conflation” with the holiday times of students and other workers. This meant more people were looking for taxis at a time when fewer people were driving them, creating a dramatic imbalance.

But the problem isn’t as simple as supply-demand economics. Didi Chuxing’s app allows its users to hire official taxis as well as private cars (driven by regular citizens), and last year it introduced a feature that suggested that customers tip the official taxi drivers in advance of being collected.

As a result taxi drivers became less keen to stop for passengers hailing them on the street because they could potentially earn more from a customer booking through Didi.

Didi acknowledged this in a statement released on its official Sina Weibo account on January 23: “Over the last two days, many people have used many means of communication to reflect their complaints regarding the difficulty and expense of hailing a car… On the basis of this feedback we will over the next few days remove the ‘suggest a dispatch fee’ function for hiring a taxi service, in order to alleviate problems caused by the pricing, as well as the supply and demand imbalance of the Lunar New Year.”

A report from Japanese newspaper Yibada has suggested this concession wasn’t entirely voluntary, however. It claims that in Shanghai, for instance, Didi was “ordered” by the city’s transportation officers to eliminate the function because it violates rules forbidding fare negotiations for taxis.

If so, the Shanghai order is another example of how Didi is having to react to new rules regulating its business. Other regulations have yet to be applied in many provinces, but in Shanghai the rules have loaded on new restrictions. One such restraint is the requirement for all of Didi’s drivers to hold a household registration permit, or hukou, for the city in which they are working. Didi has claimed that this regulation could reduce its Shanghai driver-base by up to 70%.

Beijing has issued restrictive regulations too, but the city has given operators like Didi five months to get their services into line. Perhaps the difficulties for the capital’s residents in flagging cars over the Lunar New Year period are an indication of the problems ahead if a more heavily regulated Didi emerges.

Keeping track: In a letter to employees, Didi has since announced its plans to restructure the company this year, switching focus to its more premium services as well as developing an “FT team”, which TechInAsia interprets as a “Future Transit Team”.

The FT team is evidently a bid by Didi to ingratiate itself more with local authorities, whose rulings have weakened its competitive position vis-a-vis taxi firms (most local taxi operators are state firms controlled by the local governments). The letter states, “The FT team will work together with local governments to build smart transportation systems, raising transportation efficiency citywide and improving the travel experience of the public, whilst using Big Data to improve traffic management.”


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