The Taxi Standoff: Since January this year, in an effort to gain users for their e-payments services, Alibaba and Tencent have entered heavy competition in the new market for taxi app services

Published in FOCUS magazine in May 2014.

Visitors and residents, expats and locals alike know the heartache of attempting to hail taxis in Chinese cities, while drivers are choking on higher fuel costs and suffocating traffic. Taxi apps are designed to take the agony out of basic transportation. But, as the competition becomes cutthroat, new issues arise. Here’s a look at
what China’s major urban centres have to offer in taxi travel.Guide Taxi App Guide

On 10 January, Tencent’s taxi app Didi Dache launched an aggressive discount programme, offering users three coupons of RMB 10 each and drivers five commissions of RMB 10 each on top of their regular fare day if passengers book apps through WeChat Payments, which Tencent owns. Ten days later, Alibaba made a deal with Kuaidi Dache and launched the same programme to those who book through Alipay Wallet, Alibaba’s mobile payment service. These two companies control 90 per cent of the taxi app service market. Kuaidi Dache also had a Beijing beer giveaway campaign, handing out to gain users of Tenpay, Tencent’s e-payment service, while Alipay Wallet provides the same service for Alibaba’s e-payment business, Alipay. This competition for taxi services is just one battleground for the greater war over e-payment
market share. Last month, both WeChat and Alipay Wallet also offered online-to-offline movie ticket payment services.

Although Kuaidi Dache has not released any formal data on their user base growth gained through their discount coupon campaign, many in the Chinese media believe Didi Dache came out ahead. According to data released in April, as recently as January of this year, Didi Dache’s bookings logged in 350,000 taxis a day with 400,000 registered drivers and 22 million registered smartphone users in 30 cities. By late March, the numbers had skyrocketed to over five million rides per day with over 900,000 registered drivers and 100 million passenger accounts in 178 cities. However, the voucher pricing war cost Didi Dache RMB 1.4 billion (about US $225 million).

Now that the number of users has increased, the companies are no longer offering frequent discounts in most cities. However, a recent study found 26 per cent of app users still pay via mobile payment. During busy times, riders can offer tips – not customary in China – in RMB 5 increments, to bid for taxi drivers. Apps prompt users if their bid is not high enough. Reporting on China’s social media service Sina Weibo, one driver claimed he made RMB 2,300 (US $374) in tips in one day. Many drivers juggle various apps simultaneously on multiple smartphones all mounted on their dashboard.

 

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