Strong demand and capital influx spur China's taxi apps

Want China Times, Staff Reporter 2014-01-19

Screenshots of a Chinese taxi app. (Internet photo)

Many local governments in China have banned taxi booking apps or some of their features, however the apps continue to see a boom in the Chinese market, being widely adopted by drivers and users in bigger cities for a number of reasons, according the Chinese-language business news portal TMT Post.

The report cited strong user demand for taxi apps that has boosted the market as more and more people are willing to spend money to reserve a future taxi ride and avoid wasting time hailing a cab on the streets. The taxi booking apps are also user-friendly and similar in design to the widely used WeChat, a mobile text and voice messaging communication service.

The market has become increasingly attractive for drivers and passengers as domestic taxi booking app developers frequently launch special offers for them, the report said. For instance, popular taxi-hailing app Didi Dache offers a discount for passengers wanting to book taxis through their system, while providing subsidies of up to 100 yuan (US$16.40) to encourage cabbies to use their app for accepting service requests.

Meanwhile, considerable capital has been injected into the market, which has facilitated its development. On Nov. 26, 2013, e-commerce giant Alibaba acquired Shanghai-based taxi booking app Dahuangfeng, which was later merged with its main competitor Kuaide. Alibaba has invested US$100 million for the development of the merged taxi booking app company. The Didi Dache app, backed by Chinese web titan Tencent, also received US$100 million in investments earlier this month.

Given the latest developments, the battle for the country's taxi apps will be between two of its biggest web companies — Alibaba and Tencent. Their operations cover various areas of the internet industry, with the two companies aiming to expand their online, offline payment business into catering and restaurants, accommodation and other sectors.

Taxi hailing apps have become popular in large cities as they make it easier to hail a cab during the rush hour, and more and more app developers have joined the market, according to local media reports. Thirty such apps are now available in China, with the number still climbing and the competition growing more intense.

China's taxi app market remains very chaotic however, with many developers using dubious methods to conduct promotions, an industry expert said. He added that it was normal for firms to adopt eye-catching practices given that the current top priority for all players in the sector is to win as much market share as possible.