Suzhou bans third party taxi booking apps

Alibaba's Kuaidi Dache and Tencent's Didi Dache pushed aside in favor of local apps

PUBLISHED : Monday, 28 April, 2014, 7:00pm
UPDATED : Monday, 28 April, 2014, 7:06pm

Suzhou, a major city in Jiangsu province near Shanghai, has issued an official ban on all private-sector taxi booking apps.

The ban renders third-party taxi apps useless within the city, which has 22 authorised taxi companies and a population of about ten million people. 

Suzhou's taxi companies have been instructed to educate drivers and ensure that they only use and accept customers via government-approved apps developed by the city's Passenger Transport Traffic Management Department, Chinese technology site reported. 

The ban may have been instituted to both promote local apps and to prevent Suzhou taxi drivers from becoming involved in a fierce rivalry between Alibaba's Kuaidi Dache and Tencent's Didi Dache, two apps widely regarded as market leaders. 

Both Alibaba and Tencent have been in fierce competition over the last year and a half and have increasingly courted cabbies by offering cash rebates and subsidies of about ten yuan per trip.

“The war between the two taxi booking apps will not happen in Suzhou,” said Fei Xinyi, director of Suzhou's Taxi Call Center in a February statement reported by local Suzhou website “All booking calls will come to us first and we will then pass the information to taxi drivers through a walkie-talkie installed in every car.”

Suzhou's ban is not the first time that book-a-taxi apps have come under attack in China. Accused of enabling drivers to negotiate government-controlled prices on fares for a larger cut of profit, taxi apps were temporarily banned in Beijing in 2013.

In February 2014, Shanghai also restricted third-party taxi apps from being used by drivers during rush hour - a move that likely came in response to complaints that passengers who didn't use the apps and insisted on paying normal fares were being refused by drivers. 

Despite such restrictions, book-a-taxi apps remain popular in China's large cities, largely thanks to promotional offers that mutually benefit both customers and drivers. 

Didi Dache has had particularly substantial success in the last few months of 2014. In March, Tencent expanded the app's coverage to cover 178 Chinese cities and reported receiving over five million taxi bookings a day via e-payment through the company's WePay service. 

In contrast, Suzhou's Passenger Transport Traffic Management Department revealed that its locally-developed apps receive a total of 5,700 daily online bookings on average.