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A taxi-hailing app backed by the Beijing Municipal Government has gone live this week, attempting to break into a market hotly contested by Uber and Kuaidi Didi. The app, Feidi, has an will draw its users from an existing city taxi hotline Beijing Qihua, also known as 96106, which the company claims has over 1.9 million regular users.

The relationship between the government, taxi companies and ride-hailing apps has fluctuated as private companies continue to expand in the market. Beijing has reiterated a total ban on for-profit civilian drivers since the start of the year. In July, Shanghai authorities introduced harsh new fines for any un-licensed civilians caught using the ride sharing apps. 

Feidi Che claims that their starting user base was at 15,000, though most of these drivers are not likely be exclusive users. Taxi drivers in Beijing often use a coupling of different taxi apps to boost their profits. The app supports Wechat transfer, Alipay and cash payments, and unlike the hotline itself, a 5RMB hailing charge does not apply to the app.

Unlike Uber’s China services or premium cars, Beijing’s Feidi Che will focus exclusively on facilitating rides between users and existing city taxi drivers, Kuaidi Didi’s market entry service. Most private companies have since expanded beyond taxis to enter the private car and carpooling arenas. The establishment of Feidi could be an attempt from the Beijing municipal government to calm tensions with traditional taxi drivers.

Taxi drivers have been under pressure with the influx of new services, as well as existing restrictions on small enterprise in the industry. In April this year several dozen disgruntled taxi drivers ingested pesticide in central Beijing, protesting government laws that force drivers to lease taxis from government companies instead of owning their own.

The government has kept up communication ties with the various foreign and local companies, in an attempt to moderate the industry, though it appears that the Alibaba-Tencent-backed coalition Didi Kuaidi may have an upperhand in government dealings. At the start of this month Chinese sovereign wealth fund China Investment Corporation committed to investing in the company, which uses conventional taxi-hailing services as well as black car and carpooling services. The investment is an important asset for Didi Kuaidi when it comes to navigating restrictions. 

@CateCadell 

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