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After Didi-Uber deal, Chinese commuters and drivers say they have come off worse

BEIJING — Beijing resident, Mr Zhou, 29, used to rake in about 500 yuan (S$104) daily as a private-hire car driver for Uber some three years ago, but his income has fallen by about 40 per cent since Uber’s Chinese operations got bought out by Chinese ride-hailing giant Didi Chuxing.

After Didi-Uber deal, Chinese commuters and drivers say they have come off worse

Didi has scaled back on the incentives significantly since its US$35 billion acquisition in August 2016.

BEIJING — Beijing resident, Mr Zhou, 29, used to rake in about 500 yuan (S$104) daily as a private-hire car driver for Uber some three years ago, but his income has fallen by about 40 per cent since Uber’s Chinese operations got bought out by Chinese ride-hailing giant Didi Chuxing.

While both firms had actively dangled carrots in the earlier years to encourage drivers to take up more rides via their platforms, Didi has scaled back on the incentives significantly since its US$35 billion acquisition in August 2016. The deal virtually gave Didi a monopoly in China with almost 90 per cent market share.

Didi drivers told TODAY that while they used to receive bonuses of up to 10 yuan for completing six rides, that amount has dropped to about six yuan and also become less consistent. Service fees that private-hire car drivers must pay to Didi have also jumped and vary according to the type of rides they are signed up for. The firm takes about a 25 per cent cut of the fare for express rides.

“The move has certainly had a huge impact on drivers. Some of my closest colleagues have left the industry… I too am thinking of going home if things don’t turn for the better,” said Mr Zhou, who is from the eastern Anhui province.

He plies the roads for about 15 hours, from 6am to 9pm, six days a week. “The number of hours pulled is simply not proportionate to the returns,” he said.

Like Uber and other ride-hailing apps, Didi offers several types of rides, ranging from taxis, express, and premier services. Users can also opt to carpool with other commuters. Another option, luxe, is available by reservation only and typically caters to business clients. Taxi drivers who use the Didi app do not have to pay service fees to the firm.

Mr Zhou and fellow Didi driver Lai Bao Niu also questioned the algorithm behind Didi’s mobile app, noting an apparent mismatch between demand and supply of rides.

Mr Lai, 34, told TODAY: “On one hand, passengers complain that they wait for a long time before being assigned a ride. On the other hand, we are often on the roads with empty cars.”

A commentary by China’s official press outlet Xinhua News Agency in August last year - a year after the Didi-Uber deal - slammed Didi for unreasonable price hikes for rides, adding that consumers who pay an extra 50 per cent to Didi during peak hours are given preference instead. Xinhua also noted that Didi has never disclosed its fare structure algorithms, maintaining that any fare adjustment is based on supply and demand.

The Didi app allows users who pick the “taxi” option to offer “incentive fees” to the drivers.

In response to TODAY’s queries, Didi said the claims by Xinhua were “not true” and “misleading”.

“When demand exceeds supply, Didi sometimes uses artificial intelligence to calculate a surge price to encourage more drivers to pick up orders in a certain area,” the firm said.

The surge price is capped based on two conditions, whichever is fulfilled first: One, the maximum rate should be no more than 1.5 times the original fee. Two, the extra charge should be less than 29 yuan (for Didi express) or 59 yuan (for Didi premier). “All extra charges are paid to drivers, Didi doesn’t take commission from these additional charges,” the firm said.

In addition to surge price, it also has an “order queueing system, operated on a first-order first-served basis”. This system is used more frequently at the moment, Didi said.

“In both queueing system and surge price mode, user orders are treated equally. We don’t provide paid order prioritisation,” the company said.

It said the price structures “haven’t changed much after the acquisition”. While it acknowledged that the “subsidy-driven competition has passed”, it stressed that it maintains a “very low profit margin” and a focus on “creating user value”, such as by introducing a bilingual app, chauffeured car services for people with disabilities and promoting electric vehicles.

Last month, Didi launched a plan that guarantees certain drivers 40 trips a day.

Mr Lai, who has signed up for this one-year plan, said that while it helps bring in more rides, drivers would also experience higher fuel costs. “And it also means that I have to be working for 14 hours non-stop… It seems like we are stuck, whether or not we get on this plan, this business is no longer a good deal for drivers,” he said.

A silver lining on the horizon is the entrance of new players such as Meituan Dianping. While it started out as a food delivery service, Meituan has started an aggressive foray into the ride-hailing market in Chinese financial hub Shanghai and Nanjing.

In Shanghai, for instance, Meituan has offered to waive service fees for three months, for its first 20,000 drivers. Drivers who meet the daily requiremenents of 10 online hours and 10 rides, between 6am to midnight, will also be guaranteed earnings of 600 yuan.

“We are really looking forward to Meituan’s entrance into Beijing… It is always better for drivers and consumers, if the monopoly is broken,” said a 57-year-old Didi driver, who wanted to be known only as Mr Jiang.

Commuters interviewed by TODAY said they have been forking out about 50 per cent more for each ride hailed via Didi these days, partly because the firm no longer dishes out discounts and incentives like it used to before.

Financial services consultant Xu Kai, who commutes via Didi regularly, said he now pays up to 20 yuan more for a 15km ride. “As a consumer, I definitely hope for more high-quality entrants into this ride-hailing market, so that we can get better service. The earlier discounts Didi offered were but temporary incentives. They wanted to cultivate the ride-hailing habit in consumers, then monopolise the market,” said the 27-year-old.

A brand consultant who gave her name as Nicole said she currently pays about 21 yuan for a 4km ride, up from 15 yuan some two years ago. “The massive discounts offered earlier sometimes shaved my ride to about eight yuan,” she said.

Like the Didi drivers, Nicole is anticipating more intense competition in the ride-hailing market. “A monopoly tends to manipulate the market, leading to price hikes and less innovation within the enteprrise. This cannot be a good thing to both drivers or users,” she said.

Still, most commuters said they are not giving up on their Didi rides. “Overall, ride-hailing apps have still brought greater convenience… Besides, taxi fares have gone up too,” said Ms Li Fangbing, a 30-year-old designer.

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