Fending off competition by empowering drivers in Hangzhou
2015-09-17 09:46:00

Falling revenues, poor service and new rivals. The symptoms are worrying for China's taxi industry. A surge in taxi-hailing apps has heaped more misery on the sector, but also spurred the industry to action. The city of Hangzhou, in east China, is at the vanguard of reforms that could completely revamp the taxi business.


A reform that could change everything. A new initiative by the Hangzhou government says taxi drivers will get their own licenses and will no longer be subject to contract fees. The change would make taxi drivers their own bosses.


Zhang Xiaodong, Deputy-Director of Hangzhou Road Transport Administration said:"The costs for taxi companies will be slashed thanks to operations reform. This will hopefully solve the long-term franchise fee problem."


China's taxi sector has been in a sorry state. Taxi drivers often complain about long work hours and low salaries.


Hangzhou Taxi drivers said:"Our daily gross margin is 400 yuan. But when you take away 160 yuan in contract fees, 120 yuan spent on oil. I work for 10 hours a day. How much money does that leave me with?"


And it's not just taxi drivers who are grumbling in Hangzhou. "They should enhance the quality of their service. Sometimes taxi drivers just refuse to take you somewhere if it's crowded or close by," said a Hangzhou resident.


And the emergence of cab-hailing apps has changed everything with passengers now comfortable calling private cars using their cell phones.


"Internet and 'zhuanche' services have hit us hard. Turnovers in the whole industry have dropped sharply. Since June, our company has cut 10% in contract fees. We're trying to stay alive," said Dai Jinming, General-Manager of Hangzhou Taxi Group Co..


Realities which have pushed Hangzhou authorities to action. Lu Xiande, Deputy Director of Hangzhou Transportation Agency said:"When we finish reforms on traditional taxi businesses, our plan will move to step two which is to build online hailing platforms for taxi services. We already have a plan. We'll push forward with this once there are clearer national guidelines."


Expert say that market principles have fallen behind in the taxi industry, and that it's time to restructure the sector. A success in Hangzhou would pave the way for the plan to be rolled out nationwide.

Source:CCTV.com Editor:Rose