Posted by WARC, 14 March 2014
BEIJING: Taxi-hailing apps are disrupting more than public
transport in China as they are in the forefront of a bigger change that will
affect the banking sector and possibly even the country's political structure,
commentators have said.
The China Economic Review referred to the "madness on
the streets of Shanghai" wrought by the apps, as empty taxis sought their
fares and frustrated would-be customers were turned away.
A plethora of new apps offer customers the facility of
inputting their location and destination and the promise of a tip to drivers
who then hurry to pick them up. But the recent entry into this market of
China's two internet giants, Alibaba and Tencent, signals something new according
to the Review.
It said these two had "added rocket fuel to the
trend" as they offered a reward to both drivers and passengers. By
connecting an online bank account to their respective apps, Tencent and Alibaba
were able to pay RMB 10-15 to passengers and drivers.
And since users can only get these rebates by connecting to
the companies' mobile payment platforms, the Review argued that their
involvement was part of a long game aimed at building their online banking
presence.
"Once the generous payments stop, which they will once
the market is saturated, Alibaba and Tencent hope users will spend digital cash
on e-commerce platforms paying for other goods and services," it said.
The current scale of the taxi app business is significant,
according to consultancy McKinsey, which reported Tencent paying out $60m to
drivers and passengers in one month, while one day in early February saw 2.6m
rides booked via its app.
The Review said that the state, which nominally controls the
cab industry, faced difficulties in regulating the apps.
And the Guardian picked up on one taxi driver's comment,
widely circulated on social media, to the effect that the competition between
Alibaba and Tencent demonstrated the advantages of the two-party system.
French Sinologist Renaud de Spens suggested that
"Chinese citizens have already made the link between their relationship
with power and their relationship with producers".
The idea that they were consumers with choices and rights
could have political repercussions, he said.
Data sourced from China Economic Review, Guardian;
additional content by Warc staff
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