Didi thanks Meituan for its competition and draws attention to its ‘catastrophic risks’
Didi regional director Sun Shu has thanked Meituan for the competition it has brought to the ride-hailing market in a message on his WeChat moments (in Chinese), but his message is a vehicle for pointing out safety concerns of Meituan Dache’s new operations.
Didi Chuxing has become the leader for ride-hailing across China with around 95% market share. Food recommendation and takeaway delivery company Meituan recently entered the fray in Nanjing and Shanghai, where Didi operates more than 1.5 million rides per day. As an example of competition and diversification in China, Didi is also starting to deliver takeaways. Media reports are stating that the average subsidy for Meituan Dache rides in Shanghais is RMB 40 (in Chinese).
In his message entitled “The efficiency of implementing safety measures determines the winner of every round of ride-hailing competition”, Sun Shu seemed to welcome the competition the entry of Meituan Dache represents:
“In more than five years since its founding, Didi has already experienced competition with Kuaide, Yidao, Shenzhou and Uber. Didi employees are all aware that without competition there would be no Didi so we are thankful of such competition.”
Yet it is the effects of offering subsidies that is Sun’s main message. “Since the outset of ride hailing platforms, every round of competition has begun with a subsidy war, and is finally won by safety [literally ‘safety experience efficiency’].” wrote Sun,
“We would like to thank Meituan for subsidizing its users and growing the market alongside Didi… But the subsidy is abnormally high (200% of what the customer pays) which will lead to unofficial usage [黑产] and fake orders, which will cause great harm to the entire industry. At the same time, it will cause the influx of many vehicles from outside and without undergoing safety inspections, this could lead to catastrophic risks.”
Sun is referring to the fact that high driver remuneration will attract drivers and car owners whose vehicles are not registered in Shanghai to enter the city. Although one country, various aspects of life in China are locally controlled such as where one can live and where a car is registered. Ride hailing platforms have been through various waves of regulation in different cities regarding what plates a car must have and even where the driver’s household registration is. Both Shanghai and Beijing require that both the ride-hailing car and driver be of those cities, as with taxi drivers. Meituan was called in by the authorities on its very first day of operations in Shanghai.
“Therefore, we welcome the competition, but we hope that new players can bring vitality and sustainable development to the industry, and do no simply leave the problems of a brief spell of excess, which will cause fundamental damage to the industry,” said Sun.