Guangzhou snaps up car-hailing app Ru yue to compete with Uber, Didi Chuxing on home turf

After trial-run operation, local transport authorities to buy app from state-owned subsidiary but residents complain of high fees; government will run it together with four local taxi operators and use veteran cabbies as drivers

PUBLISHED : Thursday, 10 March, 2016, 2:14pm
UPDATED : Thursday, 10 March, 2016, 2:50pm

Transport authorities in the southern Chinese metropolis of Guangzhou will spend over 1.35 million yuan (US$207,200) to purchase an Uber-like car-hailing app designed and operated by a local government subsidiary, the Nanfang Daily reported this week.

Called Ru yue, which translates as “right on schedule”, the app has been operating on a trial basis since late last year. It has already amassed more than 40,000 users and a fleet of 660 licenced vehicles controlled by four local taxi operators, the report said.

READ MORE: Guangzhou loses 100,000 drivers as China’s Didi Kuaidi, Uber and rival car-hailing apps pressured to ditch non-local plates

The fleet was less than half this size in November and consisted mostly of Toyota Camrys and Nissan models, according to earlier reports by the same newspaper.

It was initially only available for use by officials of the city’s municipal transport authority, political advisers, and deputies to the Guangzhou Municipal People’s Congress, the paper said.

The state-owned subsidiary is called Guangzhou Communication Information Construction Investment and Operation Co., Ltd. It operates under the Guangzhou Transport Committee.

While on a national level Uber has engaged in a high-stakes game with Didi Chuxing Technology (still commonly known as Didi Kuaidi), which claims to control over 70 per cent of China’s private car-hailing market, some local governments have begun experimenting with similar apps.

READ MORE: Weibo announces US$142m investment in Chinese car-hailing giant Didi Kuaidi

The key difference between Uber and government-backed Ru yue is that all cars registering with the latter must first seek local government approval.

If approved, they receive a special licence entitling them to provide a “legal transport service” to Ru yue customers, according to the municipal transport committee.

The issue of unlicenced or “illegal” taxi services has proven a thorn in the side for Uber, Didi and their smaller rivals in China in recent years.

The central government intervened last summer by giving them a deadline to meet newly issued guidelines in a bid to better regulate the industry after a spate of protests by established taxi operators in various Chinese cities.

Ru yue claims all of its drivers are veteran cabbies with a history of working for established taxi operators in the city.

Guangzhou has also been cracking down on car-hailing apps in a bid to make sure all drivers engaging in this business are properly licenced.

In March last year, Guangzhou became the first city in mainland China to order a raid on Uber’s offices. Uber experienced more such raids in other cities including Hong Kong, where several of its drivers were also subjected to a police sting operation.

Guangzhou ranks as one of Uber’s busiest cities worldwide in terms of average daily rides,

Last September, the city’s transport authorities charged a driver working for Didi Chuxing a record fine of 100,000 yuan for engaging in illegal transport activities and reaping illicit profits. It is the largest known fine levied against drivers working for such apps in China.

Some Guangzhou residents wondered what advantages Ru Yue would offer, and speculated that the government may be seeking to build a monopoly.

“I don’t see any incentive to use an app that is run by taxi companies and charges me high fees,” said He Zhijian, a retired civil servant who said he frequently uses Uber and Didi.

“I would only use it if it were cheaper than the apps I already use.”

Meanwhile, Uber and Didi Chuxing - which rebranded last summer to encompass its growing portfolio and shake off any negative stigma - are still gaining traction by offering generous subsidies to drivers and users.

Didi now runs at least seven services including car-sharing, a limousine service and shuttle buses in some parts of China.

“I love Didi’s carpooling service. It only costs 40 per cent of what I would pay for a taxi,” said Kou Liyue, who lives in neighbouring Shenzhen, also in Guangdong province.

During the testing period, Ru yue said it has been charging higher flag fees than regular taxis in the city, but that this has been offset by an initial 50 per cent discount to drum up business.

At present, its cheapest flag-fall rate is 18 yuan (US$2.83), with an additional 2.7 yuan charged per kilometre. This compares to a fixed starting fee of 10 yuan and a per-kilometre charge of 2.4 yuan among regular cabs.