Mobile Internet shakes up taxi industry and more

It's not easy being a taxi driver in China. Long hours and low pay often leave drivers feeling frustrated and angry, which eventually rubs off on customer service.

The growing frustration in the taxi industry was brought to the spotlight in recent weeks after drivers in several cities went on strike, including in Shenyang, Nanjing, and Jinan.

In the most recent strike, hundreds of drivers in east China's Jinan city suspended service, with taxi drivers citing unrealistic high franchise fees amid pressures from new ride-calling apps used by Internet firms and car-rental companies.

In China, a majority of taxi drivers are required to rent authorized taxis from commercial companies. In order to do so they pay rental fees which are often described as exorbitant. Unauthorized private vehicles are banned from the taxi market on concerns of security and market order.

In the past, taxi drivers have demanded an increase in base fares and lowered franchise fees collected by taxi companies. But car-calling apps that affect their business are also under fire, stoking concerns of a looming change in how the industry operates with mobile Internet technology. Limited services monopolized by a handful of taxi firms are increasingly failing to meet the demand of an expanding urban population.

An online survey launched since Sunday by Xinhua News Agency on its website has found more than 70 percent of respondents feel it is difficult to hail a taxi in Chinese cities.

Of almost 200 respondents that took part in the survey as of Tuesday, 75 percent believe market monopoly is the major cause to the sector's tension and poor services, such as long wait periods or being refused rides.

Due to these unsatisfactory experiences, 77 percent of the respondents say it is highly necessary to break the monopoly. Meanwhile, they are looking forward to new services enabled by mobile Internet technology.

According to the Xinhua survey, 25 percent of respondents say they regularly use ride-call apps. Another 21 percent say they are using such services occasionally.

Taxi-hailing apps such as Kuaidi Dache and Didi Dache, rolled out by Alibaba and Tencent respectively, are gaining popularity among users. By connecting passengers with drivers, the two firms account for almost 99 percent of the market with 154 million registered users in more than 300 Chinese cities.

Apart from the taxi-calling functions, the apps also provide tailored ride service to commuters by dispatching luxury cars through cooperation with professional car rental companies.

In a cautious note, the Ministry of Transport said last week that it recognized such services, which it described as innovative and beneficial in meeting the diversified needs of consumers.

It added it would closely watch and study such market services, encourage innovation, and promote standardization. However, it ordered app developers to exclude private cars from their platforms and ensure that all vehicles are owned by taxi or car-rental companies on the basis of passenger safety concern.

Chen Xusen, an associate professor on e-commerce studies with the Beijing-based University of International Business and Economics, said the new services have mobilized more resources to participate in the market, bringing multiple benefits such as job creation and meeting growing demand.

He suggests authorities offer commercial operation licenses to the rental cars and draft market access standards that regulate both driver and rental company qualifications.

As the country sees a growing role for mobile and internet services, the taxi industry is the tip of the iceberg. Traditional industries, such as taxi services, must work with emerging industries and government regulators to adapt, Chen said.