300 days after the new online car-hailing policy, Didi and others’ 6-year roller coaster ride has not yet reached the end

On November 1, 2016, the Interim Measures for the Administration of Online Taxi Booking Services (hereinafter referred to as the Interim Measures) were officially implemented. After six years of competition, doubts and disputes, online taxi booking has finally become a legal business in China. However, looking back at the starting point and the journey of this roller coaster, the controversy over online taxi booking still seems to have not reached its end.

When Zhou Hang founded Easyway in 2010, the concepts of sharing economy and O2O were not yet popular in China. In the domestic business and management book market at that time, the innovation of business models under the Internet had not yet become a best-selling topic. Only Lisa Gansky, an investor in Silicon Valley, wrote a book called "The Internet of Things", which imagined a future in which idle resources could be maximized through the Internet.

Gansky's vision did not immediately gain traction, partly because at the time, the economic model was too far-fetched. Even Uber, which was put into operation in the United States that year, started out in a way that was more or less similar to traditional taxi companies. However, in another two years, this ride-hailing company that no longer has drivers will become a representative of the sharing economy, sharing the throne of the world's highest-valued unicorn with Airbnb.

In comparison, Yidao's approach has a more "sharing" flavor. Yidao integrates idle cars from car rental companies through the mobile Internet and provides services to C-end users by establishing unified standards. However, this approach has been controversial from the beginning: in the environment at that time, as long as the car that was not a taxi was a "black car", it would be difficult to remove the hat.

But a few years later, Yidao's private car model was no longer exclusive, and the company founded by Zhou Hang became the "third in the industry" under the siege of latecomers. During this period, shared travel became a battlefield and victim of capital competition. Competition, mergers and acquisitions, and disputes continued until Didi merged with Uber this year, and the market seemed to have calmed down, but by then the chill had already spread.

In just six years, ride-hailing in China has gone through almost the entire journey of an industry from prosperity to crisis. In 2016, LeEco acquired a stake in Yidao, Didi merged with Uber, and online ride-hailing itself gained legal status, but the legalization of the business is still a problem.

High-frequency applications in the gray area: the development of shared economy travel platforms in China

In order to practice its slogan - "One Didi makes travel better." Didi and Kuaidi merged on Valentine's Day in 2015 and began to focus on various travel services such as ride-sharing, designated drivers, and test drives. At the same time, in January 2015, Shenzhou Special Car, which focuses on high-end cars, was launched. Different from the C2C model of Didi and Yidao, Shenzhou Special Car adopts the B2C operation model of "professional vehicles, professional drivers". All vehicles are regular rental vehicles from Shenzhou Car Rental and cooperate with professional driver service companies.

At the same time, Uber also announced its entry into the Chinese market by investing in the Chinese company Uber. The investors hoped that Didi and Kuaidi would stop their vicious competition and face the outside world in unison. Didi Chuxing, which was formed after the merger, started a subsidy war with Uber.

Eight months later, in October 2015, LeEco acquired 70% of Yidao’s shares. After receiving a large amount of capital from LeEco, Yidao was revived by offering very competitive prices while maintaining good vehicle and service quality.

On August 1 this year, Didi announced that it had reached a strategic agreement with Uber to acquire all of Uber's assets, including its brand, business, and data. On the one hand, under pressure from capital, both parties had to stop competing and continue to consume funds; on the other hand, Didi had already gained enough advantages in market size.

According to the "2016 China Mobile Travel Service Market Research Report" released by iResearch Consulting, data for the whole year of 2015 showed that Didi Chuxing (Express) accounted for 88.4% of the user coverage. At the same time, in China's private car (express) mobile travel service industry, Didi Chuxing (Express) accounted for 84.1% of the average daily order volume.

The market structure seems to be set, and after the fight stops, the emerging industry of shared travel seems to have a brighter future. By the end of 2015, the number of passengers of China's mobile travel services totaled nearly 400 million, reaching 399 million. According to data from Analysys International, the transaction volume of China's Internet-based private cars is expected to reach RMB 55.93 billion in 2016, an increase of 50.9% over 2015. By 2018, the transaction volume is expected to reach RMB 81.38 billion.

But in the next 300 days, the shared economy travel platform experienced a roller coaster experience of life and death.

Feeling "Life and Death" - The "Turnaround" of the New Policy on Online Car-hailing within 300 Days

On October 10, 2015, the Ministry of Transport released the "Interim Measures for the Management of Online Taxi Booking Services (Draft for Comments)" (hereinafter referred to as the Draft) for a one-month public consultation.

Behind the release of the "Draft Interim Measures" are the various mismatches between regulatory laws and emerging technologies. Prior to this, online ride-hailing services had triggered collective strikes by taxi drivers in various places due to conflicts of interest with traditional taxis. The platform's broad review of drivers has led to frequent murders and has also caused online ride-hailing services to be questioned for their poor safety.

In fact, this contradiction does not only exist in China. Last summer, taxi drivers in Paris, France, sparked a riot during a protest against Uber. And at the beginning of this year, an Uber driver in the United States shot and killed seven passers-by in succession while accepting orders, shocking the world.

The draft opinion hopes to resolve the contradictions and problems brought about by online ride-hailing from a regulatory perspective. It uses seven chapters and 50 articles to stipulate online taxi operators, online taxi service vehicles and drivers, online taxi operating behaviors, supervision and inspection, legal responsibilities, etc.

But once the draft was made public, the market was in mourning. The regulatory system that was supposed to guide the industry back on track seemed to have killed the future of the online car-hailing market.

The outstanding problem is the positioning of online car-hailing. The draft opinion stipulates that the then popular private car service should be defined as online taxi booking. Practitioners should also obtain taxi operating licenses and apply for Internet information service registration with the communications authority. The platform has a fixed business location and corresponding service agencies and service capabilities in the service location, and the relevant servers are located in mainland China, and the platform database is connected to the local transportation department supervision platform.

However, putting online ride-hailing vehicles on the same starting line as regular taxis has caused the operating costs of online ride-hailing vehicles to rise sharply. According to the draft opinion, vehicles used in online ride-hailing, even private cars, must comply with the same safety standards and scrap age as regular taxis. Drivers must also obtain the corresponding qualifications before they can go on the road.

From the perspective of passengers, the draft opinion's positioning of online taxis is also difficult to accept. The draft opinion stipulates that online taxi booking should be developed in an orderly manner in accordance with the principles of high-quality service and differentiated operation. The government guidance price or market adjustment price should be implemented for online taxi booking fares.

This actually limited the online car-hailing service to the higher-end private car range. At that time, Didi and Uber had already occupied a larger market by introducing low-end vehicles for service and providing large subsidies to Kuaiche and People's Uber. Cheap has become synonymous with online car-hailing.

July 28, 2016: The Interim Measures for the Administration of Online Taxi Booking Services were promulgated (hereinafter referred to as the Interim Measures).

It was not until July this year that the newly promulgated policy was relaxed.

The Ministry of Transport and seven other departments jointly issued the "Interim Measures for the Management of Online Taxi Booking Services" on July 28. The "Interim Measures" also stipulates online taxi booking platform companies, online taxi vehicles and drivers, online taxi operating behaviors, supervision and inspection, legal responsibilities, etc. According to the provisions, the legal status of online taxi booking, i.e. online taxis, is clarified.

Compared with the previous draft opinion, the "Interim Measures" stipulates that drivers engaged in online car-hailing services must have: more than three years of driving experience; no record of traffic accidents, dangerous driving, drug use, drunk driving, no record of accumulating 12 points in the last three consecutive scoring periods; no record of violent crimes.

But the greater relaxation comes from a series of policies that are relatively relaxed and favorable to the development of online ride-hailing. According to this standard, the vast majority of online ride-hailing vehicles in operation can obtain legal status.

October 8, 2016: Beijing, Shanghai, Guangzhou and Shenzhen simultaneously issued the management and implementation rules for online car-hailing services (draft for comments)

The Interim Measures leave room for local governments to formulate policies based on local conditions. However, the leniency at the national level becomes a different story when it comes to local governments.

On October 8, Beijing, Shanghai, Guangzhou and Shenzhen simultaneously issued the Management Implementation Rules for Online Car-hailing Services (Draft for Comments) (hereinafter referred to as the "Management Implementation Rules") and began to solicit opinions from the public. Among the four cities, the Management Implementation Rules of Beijing and Shanghai, in particular, have formulated many relatively strict restrictive clauses on driver household registration, vehicle license plates, vehicle displacement and wheelbase, etc.

This actually re-constrains online ride-hailing services into the position of "high-end taxis". For example, the management implementation rules issued by the Beijing Municipal Transportation Commission require that online ride-hailing drivers must be registered as local residents, vehicles must be licensed in the city, and the displacement of a 5-seat sedan must be no less than 2.0L or 1.8T, and the vehicle wheelbase must be no less than 2,700mm. The management implementation rules issued by Shanghai also stipulate the driver's registered residence, vehicle wheelbase, and other aspects.

Why are online car-hailing drivers and online car-hailing vehicles required to be registered in Beijing and use local vehicles? Beijing Municipal Transportation Commission said that the following factors were mainly considered: First, the development requirements of Beijing's four central functional positioning. Second, the requirements of treating "urban diseases" and relieving non-capital functions. Third, the requirements of treating traffic congestion. Fourth, the requirements of policies and regulations. The "Guiding Opinions of the General Office of the State Council on Deepening Reforms and Promoting the Healthy Development of the Taxi Industry" clearly requires that urban people's governments give priority to the development of public transportation, moderately develop taxis, and optimize the urban transportation structure.

However, there has been no follow-up since the draft opinions were issued. As of press time, except for Hangzhou and Ningbo, other cities have not issued specific implementation details.

“Hit a Didi and get going immediately.” Is this no longer effective? — What will happen to rental companies, online car-hailing drivers, and online car-hailing platforms?

Leasing companies: Either return to traditional leasing or close down

When the new policy was implemented, the leasing company behind Didi suffered the most.

Han Mo, the owner of a car rental company in Beijing, told Sina Technology that many drivers have returned their cars after the new policy was implemented, and some drivers have not returned their cars but are waiting and watching. "In the past, the supply of cars was in short supply, but now most of the cars are parked in the parking lot, which makes me upset when I see them."

There are many leasing companies like Hanmo that are backed by Didi. Although the implementation of the new policy has a direct impact on drivers, drivers only have one car, while leasing companies like Hanmo often have hundreds of cars. Once the new policy is implemented, they will face vacancy.

"Either we return to the traditional rental market, or we quit and just treat the past two years as a waste of time."

In fact, the leasing company behind Didi was once reported by Sina Technology as "The Secret of Didi's 'Legalization': There 's Something Fishy About the Leasing Company". In the first two years of Didi's start-up, they had been recruiting drivers for Didi on the front line. To a large extent, they accelerated Didi's "starting" speed, but they have always existed in an ambiguous identity.

At present, Hanmo still has hope. He believes that Didi can still help them overcome the difficulties.

Online car-hailing driver: driving a black car again

After the "Interim Measures" were promulgated on July 28, Master Li decided to stop driving for Didi from November 1.

"The subsidies are too little now. I earn one or two hundred yuan a day, which is just enough to cover the gas costs." Master Li has been in Beijing from Hebei for ten years. He has now bought his own house in Shunyi. This year, his family decided to buy a new car. Later, on the recommendation of a friend, Master Li joined Didi.

Mr. Li's friend told him that as long as he did 20 orders a day, he could easily earn 7,000 yuan a month, but after working as a Didi driver for two months, Mr. Li could only earn 3,000 yuan a month. When he called his friend for advice, his friend told him that he was no longer making money from Didi because he was now driving an illegal taxi.

"It feels like fewer people are driving for Didi now. There used to be subsidies, but now there are none. And sometimes it takes half an hour to pick up a passenger for a short trip, and I only earn 20 yuan for the whole trip, which is not even enough to cover the gas."

Mr. Li said that when he went to Wangjing last night, he found that none of the drivers around him used Didi, and all of them were illegal taxis. "For the same distance, Didi only charges 200 yuan, but illegal taxis charge 400 yuan and some people will take them."

Online car-hailing platforms: developing other businesses

The sword of regulation hanging over our heads has finally landed. At the same time, after several years of industry mergers and subsidies, the current pattern of China's travel industry has been formed. In the past few months, Didi and Shenzhou have frequently appeared in media news, but most of them have nothing to do with express and private car businesses.

Just after Didi completed its merger with Uber, media reported that Didi Chuxing and SoftBank will lead the new round of financing of more than US$600 million for Grab, a Southeast Asian ride-hailing platform. Prior to this, Didi Chuxing participated in Grab's US$350 million E round of financing in August 2015.

In addition, Didi entered into a strategic partnership with Lyft in September 2015 and invested $100 million in the latter. In April 2016, Didi launched the US version of Didi with Lyft, entering Uber's backyard. Didi also participated in the $25 million financing of Indian taxi service provider Ola, and formed an alliance with Lyft, Grab and Ola. It is said that the four parties will integrate their products to provide travel services for international travelers in China, the United States, Southeast Asia and India.

After announcing the acquisition of Uber, Didi was rumored to invest in Grab, suggesting that more intense competition would occur in Southeast Asia. However, when Grab announced its latest financing on September 20 this year, only SoftBank invested US$750 million, and Didi was not seen among the investors.

The global travel war is about to start. Didi Chuxing President Jean Liu said frankly that we still have good cooperation with Lyft, Grab and Ola. In the next step of overseas development, we have a great opportunity to seek more cooperation, but also a great opportunity to start global competition, depending on different situations.

Another competitor, Shenzhou, has also focused on its new business, Shenzhou Car Buying and Selling. In Lu Zhengyao's mind, the game of spending money on subsidies in the car-hailing war has long been settled, and he withdrew early in April this year: "Others can fight as they please, I want to free up my energy to do other things."

The top priority on Lu Zhengyao's schedule is auto e-commerce. "The battle for private cars has been won. We have handed it over to local forces. The field force is in e-commerce."

According to Lu Zhengyao's plan, in the next two years, the number of Shenzhou Auto Sales stores will reach 500, basically covering all prefecture-level cities across the country. Among them, the new car business will account for more than 90% of Shenzhou Auto's overall business.

Yidao Car Rental, the first company to enter this field, announced at a media communication meeting in June this year that it hopes to break away from the constraints of the word "private car" and explore more comprehensive car sharing to create greater value for users.

"There will be ecological private cars, but I want to tell you that the ecological private cars we want to make are not just private cars, but also ecology," said Zhou Hang, CEO of EasyGo.

The car-sharing ecosystem that Yidao wants to create is to connect all people and resources related to travel and car life. It is not only the entrance to the automotive industry services, but also a platform for monetizing advertising traffic. In the future, Yidao will no longer just provide a simple displacement service from point A to point B. In this ecosystem, all car-related needs can be met. In addition, Yidao's traffic and members are also open to sharing with ecological partners, and the value of the entrance will be truly maximized.

Just four months later, the initiative has yet to see any products.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.