TAXI-HAILING APPS
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Future of transport

Uber losing lustre in China as drivers and passengers complain about incentives and authorities get tough

PUBLISHED : Thursday, 11 June, 2015, 2:44pm
UPDATED : Monday, 17 August, 2015, 10:16am

Car-hailing app Uber’s star may be losing some of its lustre among passengers and drivers in China as the impact of its discount schemes wears off and authorities increase scrutiny of its services. 

The company has spent heavily on its presence in China as it battles local rivals including Didi Kuaidi, the largest car service app in the country, for an increasing number of users who have forsaken conventional taxis for the convenience and value of car-hailing apps.

But, drivers say, the subsidies Uber offers to drivers and its discounts to passengers have dropped sharply in the past couple of weeks, just as risk of being caught by the authorities, who deem the services illegal, has risen.

“Drivers’ income has dropped badly while on the other hand risk has increased,” said Jay Chen, a Guangzhou-based Uber driver.

“It was easy for a full-time driver to take over 100 orders per week and earn up to 5,000 yuan (US$805) weekly, the majority of it from subsidies,” he said.

“But now Uber has now cancelled a big part of the subsidies, and the changes cut my earnings to about 3,000 yuan weekly.”

Uber has faced protests in many of the cities worldwide that it has moved into, and most recently China too has seen a number of protests, some violent, against drivers using car apps. Most of the protests have come from taxi drivers who see the services as taking their business.

In Hong Kong on Wednesday, some 30 taxi drivers staged a "go-slow" to voice frustration over poor pay and increasing competition from car-service apps.

Authorities raided the offices of Uber in two mainland Chinese cities, including Guangzhou, earlier this year, and have declared car-hailing services illegal. Yet the services remain hugely popular with drivers and users, posing a dilemma for the government.

Uber however seems to have run into headwinds from Chinese users and drivers.  

Before May, it lured private car drivers through generous subsidies, like extra bonuses for rush hour or for taking more orders, said Li Jie, another Uber driver in Guangzhou.

He said he had heard that many private drivers in Guangzhou had quit Uber, and that now over 80 per cent of its drivers in the city have been newly recruited in the past month.

Uber’s China office did not immediately reply to requests for comment.

Chen and Li said they had also stopped using the Uber app from this week because they had heard of an increasing number of drivers being pulled up by police.

“From June, road checks focusing on illegal cab services have been everywhere in Guangzhou. If caught, a driver would be fined 30,000 yuan. It’s too risky.” Chen said.

On Wednesday, thousands of Uber and Didi drivers gathered in the city after hearing that a Didi driver had been caught by transport police officers who had pretended to be passengers, according to one driver who was present.

Passengers in Guangzhou, meanwhile, have grumbles about the Uber service, following an initial surge in interest in early May after the company launched an aggressive campaign of discounts in the wake of the raid by authorities on its office in the city. 

“I, as well as my family and my friends and friends of their friends, used Uber almost every day last month because the discounts were often up to 50 per cent,” said Tang Ying, a 29-year-old clerk.

“But Uber cancelled the discount in the past couple of weeks and many of my friends turned to Didi Kuaidi,” she said.

Didi Kuaidi had also gone aggressively in search of customers through discounts, saying late last month that it would spend 1 billion yuan to give free rides to passengers until June 15. But it had to cancel the promotion this week because of pressure from authorities.

Other Uber clients have complained that many of its drivers come from outside the city, are not familiar with it and drive old or dirty vehicles.

“These new Uber drivers have no sense of direction and always get lost in Guangzhou,” said 32-year-old city resident Julie Wu, a human resources manager.

“But Uber drivers’ services are still much better than Didi. I think most young people would choose Uber if the price gap is not too big. Taxis? I would like to say goodbye to them forever.” she said.

Uber is also facing problems managing its drivers, at least according to some media reports in China.

Drivers have been logging fake rides and signing up for multiple Uber accounts to grab the bonuses, the reports have said. They added that while Uber has checks in place to ensure that drivers can only sign up for one account, a black market exists on Taobao, China's largest online marketplace.

There, anyone can buy access to Uber's driver system for as little as 7 yuan. 

“Chinese drivers, like other Chinese businesspeople, are good at finding any loophole in the system and the market,” said Li, the Guangzhou driver.

“Early this year, many Uber drivers helped each other by pretending to be passengers to make fake orders and get an extra bonus,” he said, adding however that Uber had dealt with that problem.

Earlier this month, Uber began a recruitment campaign for new drivers in 12 cities across China. It now covers nine cities, including Beijing, Shanghai, Shenzhen and Chongqing.

On a visit to China at the end of May, Uber chief executive and founder Travis Kalanick said the company would "learn the local laws and bylaws to make sure its service is legal in China".