Didi and Uber have pioneered the sharing economy in China, and with their all-out competitive melee finally resolved, they can focus on doing what they haven’t yet been able to: turn a profit using one of the world’s newest and most exciting business models.
But how disruptive is the ride hailing business in China really? Agreements with rental companies, dual-user accounts and predatory loans all point to a less impressive reality: Didi and Uber are struggling to build a profitable ride-hailing model, and now they’re playing a big role in rebuilding the industry they set out to disrupt.
The idea is this: a driver who wants a car signs a two or three year contract with the company to receive a vehicle lease, and in return the driver will pay a three to four thousand monthly fare–termed a ‘revenue sharing arrangement’ (sharing is still the magic word here). Sound oddly familiar? As the contract ends, the drivers, who are considered Didi employees, close with a one-off payment, before the car (but not the license) is theirs for keeps.
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