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Didi wins, Uber retreats, but users lose

Reporter: Li Sien 丨 CCTV.com

08-04-2016 15:04 BJT

The war for China's ride-hailing market is over as Uber has decided to sell its Chinese business to Didi Chuxing. The truce will certainly secure Didi's dominance in the Chinese market while at the same time bringing Uber closer to its long-planned US IPO. But as CCTV reporter Ying Junyi found out, the deal is far from welcome among Chinese ride-sharing users and their drivers.

Both Didi and Uber spent billions in subsidizing their drivers with bonuses and their passengers with discounts. Uber China has lost 2 billion dollars by now, and Didi admitted last month that it was only now finally beginning to turn a profit in half of the cities in which it operates.

Uber founder Travis Kalanick tried to put a good face on things, saying the merger would create a profitable new company, and that this was the only way to a sustainable long-term business. All those Chinese drivers and their riders don't see things that way, however.

A male interviewee said, "I use Uber once every 2 or 3 days. It's convenient and cheaper than a taxi. After the merger I suspect the subsidies and the service quality will both go down."

A female interviewee said, "The merger creates a monopoly. I suspect changes in prices and in service quality. Office workers like me will be the most affected."

Miss Wang used to work in a trading company in Shanghai, but lost her job 18 months ago after her company went bankrupt. As a Didi driver, she now earns up to 10,000 yuan a month for driving 30 hours a week.

Miss Wang, a Didi driver, said, "Uber's takeover reduced our bonus immediately. My daily bonus dropped from 500 yuan to 350 yuan. And the weekly bonus for every 69 orders dropped from 500 yuan to 400 yuan. The rewards multiplier working morning peak hours was cut from 2.4 to 2 times, while in the evening, it's been cut from 2 to 1.6."

Wang said, she and other drivers are considering quitting if the bonuses continue to drop. "Those who drive a leased car cannot make much because of high rental costs. Many have ended their lease contracts. If you drive your own car, it's better. But we just have to adapt to reality -- it's not going to be possible to to earn as much as before."

And Mr. Lin from Didi explained the reason behind that.

Lin Kang, government relations director of Didi, said, "Subsidies were larger when the service was first launched to attract users. WeChat and Alipay did the same thing. But when more and more people get to know the business, it's natural to cut subsidies. We used promotions to educate the market, to let people learn the benefits."

Didi's takeover of the market came just after China's government last week released new regulations legalizing ride-hailing services. The new rules forbid companies from setting fees below costs as a means of pushing out competitors, essentially shutting down the subsidy business model.

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